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- Israel has seized 187 wallets allegedly tied to the IRGC with $1.5B in Tether transactions, as Tether blacklisted 39 wallets.
- This is part of a trend of nations cracking down on sanctions evasion via cryptocurrency, and Iran has faced accusations for years.
Iran and Israel have one of the most hostile relationships in modern geopolitics, defined by decades of tension, proxy conflicts, and ideological rivalry. Usually, Israel accuses Iran of funding terrorism through illicit finance, including crypto, leading to seizures, and Iran has been under heavy U.S. and international sanctions for decades.
These sanctions limit its ability to access the global financial system, such as the Society for Worldwide Interbank Financial Telecommunications (SWIFT). The crypto market offers an alternative channel for moving value outside traditional banking rails.
Israel’s Ministry of Defense, under guidance from its National Bureau for Counter Terror Financing (NBCTF), ordered the seizure of 187 cryptocurrency wallets allegedly tied to Iran’s Islamic Revolutionary Guard Corps (IRGC). Authorities say these wallets once processed $1.5 billion in USDT transactions.
At the time of the seizure, however, only about $1.5 million remained in those wallets. The seizure was carried out under Israel’s Anti-Terrorism Law of 2016, which gives the government authority to confiscate assets linked to terror financing.
Israel claims the funds were either owned by, or used for the activities of, the IRGC, which multiple countries, including the U.S., U.K., Canada, and the EU, designate as a terrorist organization. Blockchain analytics firm Elliptic is now including these addresses on its risk monitoring list, meaning exchanges and other crypto-services can flag or block them.
Tether, the issuer of USDT, blacklisted 39 of these wallets on September 13, freezing them to prevent further transactions. Even though only a small fraction of the $1.5B remains in seized wallets (roughly $1.5M), the operation sends a strong message: authorities are increasingly able to trace and act upon crypto flows linked to sanctioned entities.
Why USDT?
USDT is the most widely used stablecoin. Out of the $289 billion stablecoin market capitalization, USDT has a 58% dominance with trillions in annual settlement volume. It’s accepted across every major exchange, OTC desk, and DeFi platform, making it liquid and spendable almost anywhere.
If Iran or its proxies receive USDT, they can quickly convert it into Bitcoin, Ethereum (ETH), or even fiat in friendly jurisdictions.
USDT runs on multiple blockchains like Ethereum, Tron (TRX), Algorand (ALGO), Polygon, and Binance Smart Chain (BSC). This flexibility allows sanctioned actors to choose cheaper, faster networks like Tron, where transaction fees are low and surveillance is harder.
While Tether cooperates with law enforcement, it’s still more difficult to control than bank wires. Bad actors exploit this gray area, moving funds until authorities catch up.
For the IRGC and similar actors, this raises the stakes: once crypto flows are flagged, they risk losing even residual funds and losing access to infrastructure like exchanges or other intermediaries. With Iran’s reliance on crypto for sanctions evasion, this could trigger stricter global regulations on the stablecoin market.
Just last week, the U.S. Attorney’s Office in Massachusetts moved to seize about $584,000 worth of Tether from an Iranian national accused of supplying technology to Iran’s military. The funds were sitting in an unhosted crypto wallet, though prosecutors didn’t reveal much more about where or how it was being used.
And this isn’t an isolated case. Back in December 2024, the U.S. Treasury blacklisted a series of crypto addresses tied to $332 million in USDT transactions linked to Iran.
And in June, CNF also reported that things escalated even further when a pro-Israel hacking group reportedly drained over $90 million from Iranian crypto exchange Nobitex, sending the stolen funds into wallets with mocking labels like “FckIRGCterrorists.”*
