Tethered Together: The Network

What the Money Moves Through

On 29 April 2026, Senators Elizabeth Warren and Ron Wyden wrote to the Commerce Secretary and to the chief executive of Tether. Their subject was a loan, but their description of the company is the part worth reading first. USDT, they wrote, has reportedly served as the preferred financing vehicle for black market Russian weapons dealers, Hezbollah and other terrorist organisations, human traffickers, and state actors in North Korea and Iran.¹ They cited a United Kingdom law enforcement operation that dismantled a multi-billion dollar laundering scheme built on Tether and linked to Russian oligarchs and drug trafficking networks, in which investigators said Tether had replaced Bitcoin as the currency of choice for illicit actors. They cited a United Nations report describing it as the preferred choice for Asian crime syndicates running cyber-enabled fraud. Federal investigators were reported in October 2024 to be examining the company over sanctions and anti-money-laundering violations.¹⁶

The loan they were writing about concerns Howard Lutnick. Cantor Fitzgerald, which Lutnick led before becoming Commerce Secretary, custodies the majority of Tether's reserves and took a position in the company reportedly valued at up to $600 million carrying a right to a five percent stake. Lutnick divested by selling his Cantor stake to his four children on 6 October 2025. The following day a credit document filed in New York recorded that Tether had lent an undisclosed sum to Dynasty Trust A, a trust whose beneficiaries are those same four children, secured against all assets held by the trust — including more than half the equity in Cantor Fitzgerald.¹ The senators wrote that they wanted to ensure Tether had not sought to bribe or otherwise exert control or influence over the Secretary.

Warren and Wyden requested responses by 13 May 2026. Their letter also raised Lutnick's role advising the administration on the GENIUS Act, the stablecoin legislation Tether lobbied for and which contained provisions favourable to foreign issuers. On 22 July 2026 Bloomberg reported that court filings alleged Lutnick and White House crypto adviser Bo Hines had worked before and after the inauguration to weaken parts of that bill and shape provisions in Tether's favour, and that Lutnick, while serving as Tether's banker, had “managed to kill” less favourable legislation.² Bo Hines is alleged to have pushed bill language in the direction Tether wanted while at the White House, then joined the company after leaving government; he now heads Tether's United States arm. In April 2026 the Fellowship PAC, a political committee tied to Tether, made its first advertising purchase — $300,000 with Nxum Group, a firm Hines co-founded.²⁶ Earlier bipartisan drafts, led by Senators Cynthia Lummis and Kirsten Gillibrand in 2023 and 2024, would have imposed strict anti-money-laundering requirements on foreign stablecoin issuers. Bloomberg reported reviewing court filings, financial disclosures and other records.

What the senators described in general terms has since been documented in a specific case. In January 2026 the blockchain intelligence firm TRM Labs published an analysis, reported by the Washington Post, of two cryptocurrency exchanges registered in the United Kingdom — Zedcex and Zedxion — which it found were operating as a single enterprise under separate corporate registrations. Between 2023 and 2025 the exchanges moved roughly $1 billion for Iran's Islamic Revolutionary Guard Corps, a designated terrorist organisation, amounting to 56 percent of their total volume across the period and 87 percent in 2024 alone. The flows grew from about $24 million in 2023 to $619 million in 2024 before falling to $410 million in 2025. The vast majority were conducted in USDT on the Tron network, routed between IRGC-controlled wallets, offshore intermediaries and Iranian exchanges. TRM traced the infrastructure by making small deposits and withdrawals to map it from the inside, and followed 187 wallet addresses that Israeli authorities had designated as IRGC-controlled in September 2025.³⁴

Zedcex's corporate record ties it to Babak Morteza Zanjani, previously sanctioned by both the United States and the European Union for laundering billions of dollars of oil revenue on behalf of Iranian regime entities including the IRGC. He was arrested in Iran and sentenced to death for embezzling from the National Iranian Oil Company; the sentence was commuted in 2024 after he repaid the funds, and by 2025 he had re-emerged through DotOne Holding Group, a conglomerate spanning cryptocurrency, foreign exchange, logistics, transportation, aviation and telecommunications. The Treasury's Office of Foreign Assets Control has since sanctioned both exchanges. According to Treasury, one of them had processed over $94 billion in transactions since registering in 2022. Tether states that it maintains a zero-tolerance policy toward criminal use of its tokens and works with law enforcement to identify and freeze assets; Treasury has frozen or seized close to $1 billion in cryptocurrency from Iranian exchanges and wallets since February 2026, including a $344 million USDT freeze in April and $131 million in July.⁵⁶⁷

The company's regulatory history is not new. In 2021 the Commodity Futures Trading Commission settled with Tether over false claims that its reserves were fully dollar-backed, imposing a $41 million penalty.⁶ Calls for a full independent audit of the reserves remain unmet. Tether says it cooperates with governments on law enforcement.

The enforcement that followed reached the network and stopped there. Treasury designated Zanjani's Iran-based operations under his Dot One conglomerate, along with firms based in Turkey and the United Arab Emirates that had supported his already-designated digital asset exchanges, and named senior executives at those firms. Treasury described a portfolio spanning financial services, digital asset trading, gold and precious gem production, and major infrastructure projects, used to launder revenue and move funds covertly for Iran. A State Department spokesman said the United States was holding Zanjani and his sprawling network accountable for enabling the Iranian regime to evade sanctions and finance its destabilising activities, including support for the Revolutionary Guard, and framed the action as further pressure following attacks on commercial vessels transiting the Strait of Hormuz. Treasury Secretary Scott Bessent said Iran was already paying a steep economic price, with the rial at a record low and inflation rising.

The exchanges were sanctioned. The front companies in two jurisdictions were sanctioned. The executives were named. The issuer of the token that carried the money was not. Tether has been under reported federal investigation since October 2024 over sanctions and anti-money-laundering violations, with no public action; the Justice Department unit that would have conducted it was disbanded in April 2025 by a memo from the deputy attorney general who is now the nominee for Attorney General. TRM Labs estimates the Revolutionary Guard has moved $3 billion in cryptocurrency since 2023 across more than 5,000 addresses. The rail carried all of it.

The same office was moving in the other direction on a different file. Gazprombank was placed on the Specially Designated Nationals list on 21 November 2024, and licences issued that December and the following January expressly barred Russian banks from payment operations connected to Hungary's Paks II nuclear expansion — which stopped the project, because Gazprombank supplies the performance guarantee under Rosatom's construction contract. On 29 June 2025 Hungary's foreign minister announced the United States had lifted the restriction. The general licence permits twelve Russian financial entities, among them Gazprombank, VTB Bank, Sberbank and the Central Bank of the Russian Federation, to transact on civil nuclear projects begun before the designation date. A further measure in November 2025 reversed the Paks II exclusion specifically. The Centre for Eastern Studies assessed it as the first instance of this administration directly softening previous US sanctions on Russia. The designation itself was never lifted; a licence was issued permitting the transactions it prohibited.⁸⁹¹⁰

The Treasury Secretary announcing those designations sits in the same cabinet as the Commerce Secretary whose four children are the beneficiaries of a trust that borrowed from that issuer, and whose former firm custodies its reserves. Court filings allege that Commerce Secretary killed the legislation that would have imposed anti-money-laundering requirements on foreign stablecoin issuers.²

The Justice Department unit that investigated cryptocurrency no longer exists. The National Cryptocurrency Enforcement Team was disbanded in April 2025 by a memo from Todd Blanche, then deputy attorney general, which directed the Fraud Section to cease crypto enforcement and refocus on immigration and procurement fraud.²⁷ No connection between that decision and the Tether investigation has been established.

A Shareholder on the Federal Payroll

Christopher Harborne owns roughly twelve percent of Bitfinex and its sister company Tether. He also owns AML Global, an international jet fuel brokerage incorporated across the British Virgin Islands, Hong Kong and Wyoming as four separate entities employing more than six hundred people. According to the Delaware Superior Court opinion in his defamation suit against Dow Jones, AML Global has been awarded $39 million in United States Department of Defense contracts.¹¹

Greenpeace Unearthed obtained eight active contracts awarded to AML Global by the Defense Logistics Agency between 2023 and 2026, covering refuelling for US military and government aircraft at more than thirty airports across Africa, Asia and the Pacific. Working with Data Desk and the commodity-tracking service Kpler, the investigation traced crude deliveries to the refineries named in those contracts and found fuel originating from refineries that take Russian, Iranian and Venezuelan crude, delivered into pooled airport storage from which any aircraft at the airport is supplied.¹² AML Global states that it has had a sanctions policy in place. The company and Harborne were approached for comment.

The defamation suit itself is instructive about what reporting on this costs. Harborne sued Dow Jones in February 2024 over a March 2023 Wall Street Journal article headlined "Crypto Companies Behind Tether Used Falsified Documents and Shell Companies to Get Bank Accounts." A week before the filing, the Journal appended an editor's note and removed five paragraphs concerning him. In its motion to dismiss, Dow Jones argued the removed material was substantially true but had not met its editorial standards, and attached an internal Signature Bank email from February 2018 headed "Hotlist additions" adding Harborne's Thai name. In December 2024 Judge Kathleen Miller denied dismissal in an opinion running past nine thousand words, finding the complaint adequately pleaded falsity and actual malice. The case is in discovery. Harborne is represented by Clare Locke, a firm known for defamation actions against news organisations.

Seven in Ten

Roseville, California spent roughly $450,000 on Flock Safety cameras to catch stolen vehicles and felony suspects. Between 2023 and 2024 the system sent Roseville police 1,427 alerts flagging vehicles as stolen or connected to felonies. An internal police analysis, obtained by Business Insider through public records requests, found that 71 percent of those alerts contained misread plates.¹³ One resident was flagged six times because the software could not distinguish a nine from an eight. Roseville has reported problems to the company dozens of times over four years and meets with it twice a month. The cameras are still running.

Max Isaacs, director of technology law and policy at New York University's Policing Project, told Business Insider that a 71 percent misread rate is beyond the pale, and that absent concrete rules addressing misreads the technology is not safe to deploy in communities. Flock attributed the error rate to Roseville's atypical deployment: older hardware, cameras mounted higher and further from the roadway than recommended, and rear-only plate capture chosen so that faces would not be recorded. Each of those is an ordinary municipal decision. Roseville disputes the company's claim that performance has since improved.

The Institute for Justice has catalogued at least twenty-seven cases nationwide in which drivers were stopped, detained at gunpoint or arrested because of mistaken Flock alerts. Officers held an entire Arkansas family at gunpoint after a camera misread a single character. A San Diego man spent nearly a month in jail after cameras wrongly linked his vehicle to a violent crime committed five miles from where he was. In Toledo, a seven misread as a two led to Brandon Upchurch being attacked by a police dog; he settled for $35,000.¹⁴

The Side Door

Flock Safety operates in more than six thousand communities, has crossed 100,000 cameras, and scans roughly twenty billion plates a month. California law prohibits sharing licence plate data with federal or out-of-state agencies without case-by-case authorisation, and SB 54 separately bars sharing with federal immigration authorities. A class action filed in San Francisco Superior Court in February 2026 and amended in April alleges that federal and out-of-state agencies — including ICE, Customs and Border Protection, the FBI and the ATF — queried the city's cameras more than 1.6 million times in seven months.¹⁵ At the statutory rate of $2,500 per violation, the claimed exposure runs into the billions.

The pattern repeats wherever anyone audits. Mountain View disabled all thirty of its cameras on 3 February 2026 after an audit showed the ATF, the Air Force and the GSA Inspector General had accessed its data. Oxnard suspended its cameras on 27 February after discovering that a vendor-side issue had enabled nationwide querying despite the city setting access to California only. San Jose audit logs recorded search reasons entered as nothing more than "CBP", "ICE" and "fresno dea intel". A San Francisco police compliance audit disclosed in June 2026 found the Northern California Regional Intelligence Center had made 299 improper queries on behalf of federal and out-of-state agencies over about a year. At least fifty-three cities have cancelled their contracts.¹⁶¹⁸

Flock states that ICE does not have direct access to its platform and that its pilot programmes with CBP and Homeland Security Investigations have ended.¹⁷ Both statements can be true while the audit logs show what they show, because the searches were run by local officers who typed the federal agency's name into the reason field. The company's formal position and the record of access are not in conflict; they describe different layers of the same arrangement.

The Round Trip

Palantir reported $687 million in United States government revenue in the first quarter of 2026, up 84 percent year over year, alongside 206 deals of at least $1 million, 72 of at least $5 million and 47 of at least $10 million.²² The shape matters as much as the total: a large number of mid-sized awards, few of them individually large enough to attract review.

Greg Barbaccia spent ten years at Palantir, from 2010, rising to head of intelligence and investigations. He left in 2020 for a blockchain analytics company and then a credit underwriting firm. In January 2025 he became Chief Information Officer of the United States, a position at the Office of Management and Budget that sets technology policy across the federal government and requires no Senate confirmation. By July 2025 he was also federal Chief Artificial Intelligence Officer. By September, government service delivery lead. By February 2026, acting director of Technology Transformation Services. In that period he pushed agencies to rethink how they buy and manage technology, sought tougher enforcement of the 2014 law giving agency CIOs authority over technology investments, and explored ways for the budget office to track major IT decisions across agencies.

He leaves government on 31 August 2026 and returns to Palantir. The move was disclosed offhand by the head of the General Services Administration during a graduation ceremony for the U.S. Digital Corps, and confirmed afterwards by officials speaking anonymously because they were not authorised to discuss it. Barbaccia's own departure email to the CIO Council, obtained by FedScoop, called it a difficult decision to leave government and did not say where he was going. From the stage, the GSA administrator put it this way: "Luckily, Palantir gets you back in that way."²³²⁴

The inverse arrangement carries the same feature. Paolo Zampolli has been United States Special Representative for Global Partnerships since March 2025, a post requiring neither Senate confirmation nor an FBI background check. He introduced Donald Trump to Melania Knauss in 1998. He has accompanied the Vice President to Hungary for the nuclear agreement and travelled to Uzbekistan promoting Boeing aircraft, describing himself as the world's second-best Boeing salesman after the President, which the company has not confirmed. He does not appear as a United States negotiator in any publicly released deal documentation. Pricing and delivery were handled by Boeing's commercial team; government-to-government advocacy ran through the Commerce Department's Advocacy Center; export financing runs through the chairman of the Export-Import Bank; sanctions compliance for the Hungary nuclear memorandum, including the Gazprombank licence, runs through the Office of Foreign Assets Control. His own description of the function, given to the Financial Times: "I bring people together, global partnerships. Then come the details… that's where the secretaries come in."²⁵

What This Costs to Establish

Three lawsuits are testing the licence plate networks, on three different legal theories. The Electronic Frontier Foundation and the ACLU of Northern California sued San Jose in Santa Clara County Superior Court on 18 November 2025 on behalf of SIREN and CAIR-California, arguing that warrantless searches of stored location data violate the California Constitution. San Jose operated 474 cameras, tracked about 2.6 million vehicles monthly, and ran 261,711 warrantless database searches in a single year — roughly 692 a day, with 0.2 percent of scans flagging a vehicle police were looking for.¹⁹²⁰ The suit forced the city to cut retention from a year to thirty days and to disable federal sharing in February 2026. The Institute for Justice filed a second action in the Northern District of California on 15 April 2026 under the federal Fourth Amendment, arguing thirty days is still too long.²¹ The Flock class action proceeds separately in San Francisco.

None of that reached a regulator first. Every discovery in this account came from a municipal audit, a public records request, or a plaintiff's lawyer.

Self-Executing

A Treasury Secretary sanctions a network for moving money in a token whose issuer lent to the Commerce Secretary's children. A Commerce Secretary divests exactly as the rules require, and the buyer is his children. A stablecoin issuer lends to the trust that bought his stake, and the filing is public in New York. Legislation is shaped by people who later work for the company it benefits, which is lobbying, and lawful. A jet fuel broker holds Defense Logistics Agency contracts and a stake in Tether, and the two facts appear in a court opinion and a procurement record that no one had reason to read together. A camera network sold to a city for stolen vehicles answers a federal query because a vendor left a setting enabled and a local officer typed a three-letter word into a reason field. The official who set federal technology policy for nineteen months goes back to the contractor he came from, and the announcement is made from a stage at a graduation ceremony. A sanctions designation stays in force while a licence permits the transactions it prohibits. Each step has a defensible account.

What distinguishes this from the failures documented in the companion piece is that nothing here needed to break. The California ALPR Privacy Act was not repealed. The federal divestiture rules were not waived. The GENIUS Act passed both chambers. The enforcement unit that would have examined the stablecoin was closed by a memo, in the ordinary exercise of prosecutorial discretion, and the memo is public. In most of this there is no violation to point at.

The Roseville cameras ran for four years at a 71 percent misread rate. The department reported the problem dozens of times and met the company twice a month. The alerts kept going to armed officers, and the Institute for Justice has catalogued twenty-seven cases nationwide of drivers stopped, held at gunpoint or arrested on a mistaken read. Nobody had to approve each alert. The system had been procured, and it ran.

In every instance above, the fact became public because someone outside the system went looking — a municipal auditor, a public records request, two senators writing a letter, a plaintiff's lawyer, a court that refused to dismiss. Not one of these arrangements was surfaced by the body that authorised it.