US prosecutors moved Monday to forfeit about $61 million in Tether’s USDT stablecoin, alleging the funds came from black-market sales of sanctioned Iranian oil and were meant to finance Iran’s government and military, including the Islamic Revolutionary Guard Corps. The civil complaint, filed by the US Attorney’s Office for the Southern District of New York, describes a laundering network that moved more than $1.5 billion in oil proceeds through crypto wallets, exchanges and money-transfer businesses. The action is one of the larger stablecoin forfeiture claims tied to Iranian sanctions to date, and it arrives at a moment when Washington is tightening the financial screws on Tehran across multiple fronts at once.
How the scheme worked
According to the Justice Department, two Hong Kong-incorporated companies, Blessed Trust and Hexa Whale, used Binance accounts to convert proceeds from oil sold to buyers in China into cryptocurrency. Blessed Trust presented itself as an asset management and digital custody firm. Hexa Whale described itself as a commodities broker. Prosecutors say both performed similar conversion work in coordination with each other and related entities, effectively operating as a laundering pair for the same upstream network.The DOJ alleges the oil was sold outside the sanctions regime imposed on Iran’s petroleum exports, with proceeds routed back to Tehran and entities it controls. After conversion into USDT and other digital assets, a network of associated addresses received and distributed the funds through unhosted wallets, an Iranian crypto exchange and money-transfer businesses linked to the IRGC. Investigators traced transfers across multiple blockchains before identifying the frozen tranche now at issue in the case. The complaint lays out the flow in unusual detail, naming the corporate fronts, the exchange accounts and the wallet clusters in sequence, which suggests a long-running investigation rather than a quick strike.
“Today’s action demonstrates our determination to deprive the Government of Iran and its terrorist proxies of the illegal money they rely on to threaten the lives and safety of the citizens of the United States and elsewhere,” said Deputy US Attorney Sean S. Buckley.
Tether already froze the funds
Tether froze $61.19 million across 10 Tron addresses in 2025 after the activity came under scrutiny. A seizure warrant dated September 14 now authorizes the FBI to transfer the frozen tokens to a government-controlled wallet, pending the outcome of the forfeiture case. Civil forfeiture proceedings allow the government to claim property it alleges is tied to crime; holders can contest the claim in court, but in sanctions cases tied to state actors, contestation is rare and rarely succeeds. The freeze-to-forfeiture sequence has become a template: the issuer locks the tokens, the warrant moves them, and the civil complaint papers over the legal transfer.Binance, for its part, said it does not permit transactions with sanctioned individuals and continues to cooperate with law enforcement, including investigating, restricting or freezing accounts where appropriate. A spokesperson noted the complaint was not filed against Binance and does not allege wrongdoing by the exchange. Still, the filing documents in detail how accounts on the world’s largest crypto exchange were allegedly used to move sanctioned oil revenue, which keeps pressure on compliance teams across the sector. Exchanges in Hong Kong and the wider region have faced repeated questions about how sanctioned entities open and fund accounts, and this complaint will feed that debate in policy circles.
Wider enforcement context
The filing lands as Washington expands financial pressure on Tehran while the US-Israeli conflict with Iran disrupts energy infrastructure and shipping across the Middle East. Brent crude has traded between $99 and $108 in recent sessions after strikes on Saudi infrastructure, and sanctions enforcement against oil financing has intensified alongside the military campaign. The Strait of Hormuz remains snarled, and Houthi forces seized a Red Sea port this week, adding a second chokepoint to the global oil trade. With physical interdiction of tankers harder to sustain, financial tracing has become the main lever available to enforcers.For the crypto industry, the case is another reminder that stablecoin issuers and exchanges sit inside the sanctions perimeter whether they like it or not. Tether has frozen hundreds of millions of USDT at law enforcement request in recent years, and the DOJ’s use of civil forfeiture against frozen tokens has become a routine tool rather than an exceptional one. The department has brought similar actions against wallets tied to Russian sanctions evasion and North Korean laundering networks, and courts have generally backed the government’s tracing methodology when it reaches the evidentiary standard.The scale of the alleged network stands out. Prosecutors put total flows through the related address cluster at more than $1.5 billion, a figure that dwarfs the $61 million being forfeited in this filing. That gap suggests additional complaints may follow as investigators work through the rest of the graph. Compliance analytics firms have spent years building clustering tools for exactly this kind of tracing, and the complaint’s level of address-level detail shows how far that capability has matured. What took bank investigators weeks in the wire-transfer era now happens on-chain in days, sometimes hours.For USDT holders, the practical takeaway is unchanged: tokens frozen at issuer request stay frozen until a court says otherwise. For exchanges, the case underlines that account-level monitoring of sanctioned-entity exposure is now table stakes, and that cooperation statements issued after a filing do little to blunt the reputational cost of appearing in the court record. For stablecoin issuers, the episode shows the value of fast freeze capability, which Tether executed here more than a year before the formal forfeiture action reached the docket. Expect similar complaints as long as discounted Iranian crude keeps finding buyers, and expect the crypto leg of those deals to keep drawing enforcement attention first, because the paper trail is public by design.