Did Tether freeze Venezuela’s stablecoins? Is Iran next?

Tether may have just frozen a good chunk of Venezuela’s stablecoin wealth, but other nations using USDT to dodge U.S. economic sanctions have yet to face any blowback.

• Did Tether’s $182 million USDT freeze target Venezuela?
• TRM flags Iran moving USDT through bespoke exchanges
• Chainalysis says stablecoins are 84% of illicit volume
• USDC volume outpacing USDT due to DeFi
• Trump’s World Liberty Financial launches USD1 borrowing/lending

On January 10, the Whale Alert blockchain tracking service began flagging a series of major freezes of the USDT stablecoin by its issuer Tether. Before the day was done, the total amount of USDT frozen in five digital wallets had topped $182 million, in what appeared to be a coordinated action against a single target.

All of the frozen USDT existed on the TRON network, on which ~$82.5 billion of the nearly $187 billion in issued USDT resides (another $103 billion resides on the Ethereum network). USDT on TRON has a reputation of being the primary token/network combination for much of the criminality—laundering the proceeds of hacks and pig butchering while also fueling terrorist activity—that has done so much damage to the crypto sector’s reputation.

The size of the freezes has led to speculation that the tokens in question may have ties to the Venezuelan government. The same day the tokens were frozen, the Wall Street Journal dropped a report on USDT’s pivotal role in helping Venezuela’s state-run oil company evade U.S. economic sanctions.

As much as 80% of Petroleos de Venezuela’s (PdVSA) oil revenue is believed to be generated via USDT, but the Journal claimed Tether was helping U.S. authorities “freeze dozens of wallets identified as being involved in the Venezuelan oil trade.” As the Journal put it: “Tether’s financial ties to Venezuela put the cryptocurrency company in prime position to aid U.S. authorities as they seek to track down what happened to funds allegedly stolen by the [President Nicolás] Maduro regime.”

USDT also helped average Venezuelans avoid the severe depreciation of the local bolivar currency as the sanctions took hold. Ari Redbord, TRM Labs’ global head of policy, told the Journal that “the issue isn’t Tether itself, but the dual-use reality of stablecoins. They can be a civilian lifeline and, under sanctions pressure, a tool for evasion.”

On January 9, Tether issued a statement hailing its new collaboration with the United Nations Office on Drugs and Crime “to strengthen cybersecurity and public education on digital asset security in Africa.” But neither Tether nor its primary public face (CEO Paolo Ardoino) have yet issued any comment regarding this mass freezing event.

In September 2024, Tether, TRON, and the TRM Labs blockchain intelligence firm teamed up to launch the T3 Financial Crime Unit (T3 FCU), which targets illicit digital asset activities. The FCU, which claimed to have frozen “more than $300 million” in its first year, was soon followed by T3+, an expanded version of the unit that welcomed major crypto players like the Binance digital asset exchange.

Last November, the Financial Action Task Force (FATF) issued a report that called T3 FCU “an invaluable resource for law enforcement agencies worldwide.” The FATF celebrated this public-private partnership for its ability to “support freezing, seizure, and confiscation actions” related to illicit blockchain activity.

TRM says Iran dodging sanctions via USDT, bogus UK exchanges

TRM expanded on its crime-fighting efforts in a preview of its 2026 Crypto Crime Report that credited “expanded stablecoin issuer enforcement” for the dramatic increase in its identified volume of illicit crypto activity. Said activity hit an all-time high of $158 billion last year—up from $64 billion in 2024—and reversed a three-year downward trend.

TRM cautioned that it changed its methodology for the 2026 report, based on its view that illicit volume activity was previously “undercounted.” This complicates historical comparisons, but TRM claims the illicit share of overall activity fell from 1.3% in 2024 to 1.2% last year.

So “while certain illicit categories expanded in absolute terms, illicit actors absorbed a smaller proportion of new capital entering the crypto ecosystem.”

Darknet market volume reported year-on-year growth of 20% last year, while the volume of hacked/stolen funds was up 31%. But sanctions-related volume shot up by more than 400%, which TRM attributes to “both large-scale enforcement actions and improved attribution of activity linked to already sanctioned actors.”

TRM reported that nearly half of 2025’s sanctions-related illicit volume was done via A7A5, the ruble-denominated stablecoin ostensibly launched by Kyrgyzstan-based Old Vector one year ago. Last year, the European Union sanctioned A7A5’s developer and issuer, along with the operator of the Kyrgyzstan-based Grinex exchange, which launched shortly after an international law enforcement effort took down the similarly dodgy Garantex exchange.

But TRM also issued a separate preview of its 2026 report detailing the process by which Iran’s Revolutionary Guard Corps (IRGC) used two UK-registered exchanges—Zedcex and Zedxion—to move ~$1 billion past the sanctions watchdogs since 2023, with the bulk of that volume occurring in the past two years. These transactions, representing over half of the two exchanges’ total volume during this period, “were conducted almost entirely in USDT on the TRON blockchain.”

TRM said the two exchanges “appear to function as a single exchange, despite registering as separate entities in the UK.” Both companies filed corporate documents listing a Babak Morteza as a director, which TRM believes is a beard for Babak Zanjani, “one of Iran’s most notorious sanctions evasion financiers, previously sanctioned by the U.S. and EU for laundering billions of dollars in oil revenue on behalf of regime entities, including the IRGC.”

Interestingly, Zanjani was arrested by the Iranian regime in 2013 under suspicion of embezzling over two billion dollars. He was convicted and sentenced to die, but this sentence was commuted in 2024 after he apparently proved more useful to the regime alive than dead.

TRM says this apparent IRGC evasion represents “a more mature risk” than the typical theft/launder process. This gambit involved “a sanctioned military organization operating exchange-branded crypto infrastructure offshore, embedded directly in global stablecoin markets, moving value persistently and at scale. This is not episodic abuse of crypto rails; it is infrastructure-level control.”

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Chainalysis says stablecoins are 84% of illicit volume

That said, Chainalysis says stablecoins “now account for 84% of all illicit transaction volume,” seven points higher than the fixed-value tokens claimed in its 2024 report. In an apparent nod to both Iran’s bogus exchanges and Russia’s A7A5 focus, Chainalysis says nation-states are increasingly “standing up their own bespoke infrastructure to evade sanctions at scale.”

A7A5’s market cap and volume are hard to estimate, but Chainalysis claims A7A5 accounted for $93.3 billion worth of transactions in just its first year of operation. (TRM puts the figure at $72 billion, plus “an additional $39 billion sent to the A7 wallet cluster.”)

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2025 stable volume soars

On January 9, Bloomberg reported that overall stablecoin transaction volume hit $33 trillion in 2025, a 72% rise from 2024, citing data compiled by Artemis Analytics. Volume accelerated in the final quarter of 2025 to $11 trillion, up sharply from $8.8 trillion in Q3. Artemis credited the gains to the pro-crypto stance of the U.S. government under President Donald Trump, who signed the stablecoin-focused GENIUS Act into law last summer.

Tether’s USDT boasts a market cap more than twice the $74.4 billion cap of its closest rival, USDC, issued by Circle (NASDAQ: CRCL). However, Artemis said USDC accounted for $18.3 trillion in transaction volume last year, $5 billion more than USDT, thanks to USDC’s preeminent role on decentralized finance (DeFi) platforms.

And USDC’s market cap growth outpaced USDT for the second year in a row. USDC’s cap grew by 73% last year while USDT improved by 36%. Both figures are down slightly from 2024, which saw USDC rise 77% and USDT up 50%.

Despite USDC’s DeFi popularity, Artemis co-founder Anthony Yim said DeFi’s share of stablecoin volume took a step back in 2025. Yim said Trump’s crypto embrace was bolstering mainstream usage and “signalling mass adoption of digital U.S. dollars, especially in an increasingly unstable geopolitical landscape.”

A 2026 outlook issued by Galaxy Digital included the bold prediction that stablecoins “will overtake” the ACH (automated clearing house) traditional finance system in transaction volume this year. ACH handled $68.6 trillion worth of transactions through the first three quarters of 2025, and while the Q4 figures aren’t out yet, the total will likely come in ~$90 trillion, a potentially modest improvement over 2024’s $86.2 trillion.

It bears noting that ACH volume includes far more transactions purchasing products and services than stablecoins, which—despite the sector’s furious spin doctoring—remain principally used as one-half of a trade for some other token.

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World Liberty Financial finds its purpose in USD1

Last autumn, Tether promised to launch a new U.S.-focused, GENIUS-compliant stablecoin called USAT. However, USAT failed to launch in December as advertised, and the most recent tweet from its official X account contains the somewhat ironic promise that USAT users can “ditch the wait” once the token launches.

One stablecoin that did launch last year was USD1, courtesy of the Trump family’s DeFi project World Liberty Financial (WLF). The token’s market cap currently stands at just under $3.5 billion, roughly $700 million of which was added since Christmas Eve.

From its inception during the middle of Trump’s 2024 election campaign, WLF promoted itself as a means of empowering those who, for whatever reason, lacked access to mainstream financial services. But beyond issuing USD1 and the company’s ‘governance’ token WLFI, the company seemed to have no other functional purpose.

As of Monday, that function-free era has drawn to a close, as WLF announced the launch of its new lending/borrowing operation World Liberty Markets (WLM). The product is now live on the WLF website, with infrastructure provided by the Dolomite DeFi lending/borrowing platform.

WLF says WLM “provides access to opportunities for lending and borrowing functionality for USD1,” as well as WLFI, USDC, USDT, Ethereum’s native ETH token, and the ‘wrapped’ version of BTC (cbBTC) launched in 2024 by the Coinbase (NASDAQ: COIN) exchange. WLF says WLM will also “support new tokenized assets as they launch,” including tokenized versions of real-world assets, both “third party and WLFI-branded.”

WLF co-founder/COO Zak Folkman told Bloomberg that the company is also exploring partnerships with exchanges, prediction markets, and real estate platforms. Last October, WLF CEO Zach Witkoff publicly mused about tokenizing the Trump family’s real estate portfolio. The president’s son Eric Trump later said he was “working on [potentially tokenizing Trump Org real estate] as it pertains to one specific building.”

But for the moment, WLM is primarily aimed at “creating deeper and wider access to USD1 across all WLFI applications.” And as USD1 “integrates into more third party applications, networks, and products, users will see more earning opportunities, and more utility across the ecosystem.”

WLM is also ‘embracing’ the USD1 Points Program, which allows USD1 holders who put the token to work on WLM to receive “reward points, subject to eligibility and applicable terms.”

Said rewards are apparently coming from Dolomite, not WLF, and WLF’s terms of service now contain a lengthy section on “the interface and relationship to third party service providers” like Dolomite. Basically, as the interface, WLF doesn’t assume responsibility for much, meaning users should scout the terrain carefully before committing their assets.

For the record, WLM is not available for users in Australia, Canada, China, the European Union, Indonesia, New York, “and certain other U.S. states,” the Philippines, Singapore, and the U.K.

Last week, WLF revealed that it had filed an application with the U.S. Treasury Department’s Office of the Comptroller of the Currency (OCC) to establish World Liberty Trust Company, National Association (WLTC), “a proposed national trust bank purpose-built for stablecoin operations.” The plan is for WLTC to issue USD1 to further raise its profile and market cap.

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