Blumenthal targets Tether as TradFi backs OpenUSD
- Visa, Stripe, and Coinbase put $1 billion behind OpenUSD to steal Tether's yield model.
- Senator Blumenthal pressed federal agencies to investigate Tether over alleged Iranian sanctions evasion.
- Tether froze $550 million in Iran-linked funds this year while calling Washington's push competitive lobbying.
Corporate payment giants and Washington politicians are squeezing Tether from both ends of the market.
Former Stripe executive Zach Abrams launched OpenUSD with a $1 billion liquidity commitment from Visa, Mastercard, Stripe, Shopify, and Coinbase. The consortium upends Tether's model by distributing reserve interest to partners based on transaction volume instead of hoarding yield income.
The initiative exposes emerging friction across existing industry alliances. Coinbase renewed its USDC revenue-sharing agreement with Circle through 2029, yet signed onto OpenUSD to capture enterprise flows USDC cannot reach. On Presidio Bitcoin Jam, Steve Lee explained that traditional payment networks are embedding themselves in OpenUSD governance to protect fee extraction rights as settlement shifts away from legacy card rails.
Five days after the OpenUSD consortium unveiled its war chest, political pressure mounted in Washington. Senator Richard Blumenthal issued a Senate subcommittee report accusing Tether of acting as a primary financial channel for Iranian sanctions evasion.
The report claims 84 percent of 846 illicit wallets reviewed by US and Israeli authorities transacted primarily in USDT, routing over $603 million through networks linked to Hezbollah, the Houthis, and Iranian military procurement between 2021 and 2025. Blumenthal urged federal authorities to open compliance investigations, pointing explicitly to Cantor Fitzgerald and former chief executive Howard Lutnick's recent divestment.
Tether chief executive Paolo Ardoino pushed back, noting the issuer froze $550 million in Iran-linked assets in 2026 alone and arguing public blockchains give law enforcement superior visibility. On Bitcoin And, analyst David Bennett argued the political assault aims to degrade Tether's dominance to favor regulated domestic competitors like Circle and the OpenUSD coalition.
Offshore stablecoins can no longer rely purely on liquidity network effects when corporate rivals offer yield and domestic politicians wield enforcement powers.
The battle for global dollar settlement has entered a far dirtier phase.
Source Intelligence
- Deep dive into what was said in the episodes
Dots Not Bots | Bitcoin News • Sep 30
- Senator Richard Blumenthal released a senate report alleging Tether is a primary tool for Iranian sanctions evasion, noting that 84% of 846 examined wallets linked to Iran transacted in USDT. David Bennett suspects the report is a coordinated effort by Circle and Israeli intelligence to damage Tether.
- Tether CEO Paolo Ardoino defended the firm by highlighting its cooperation with law enforcement, stating that public blockchains offer superior funding visibility. The company reported freezing over $4.9 billion across multiple jurisdictions, including $550 million linked to Iran's central bank in 2026.
Also discussed on this episode: (6)
Custody (2)
- After BitGet resumed withdrawals following a $388 million hack, customers withdrew 4,098 Bitcoin within one hour. CEO Gracie Chen confirmed the hot wallet breach but stated that cold storage remains unaffected, though the company's protection fund dropped below $200 million.
- Security firm Slow Mist traced the BitGet exploit to an August zero-day vulnerability in a third-party product. Attackers used stolen credentials to bypass risk controls and inject system commands, eventually deploying a customized tool to forge withdrawal records.
Banking (1)
- Morgan Stanley launched a digital asset lab to test tokenized deposits, central bank digital currencies, and stablecoins. Amy Oldenburg argues that client education, rather than product design, remains the primary hurdle for broader Bitcoin adoption.
ETFs (1)
- Han ETF launched a Euro-hedged Bitcoin fund to protect European investors from fluctuations between the Euro and the US dollar. Co-CEO Hector McNeil explained that because Bitcoin is priced in dollars, unhedged products expose European buyers to dual currency risks.
Models (1)
- McDonald's uses machine learning models developed by Tiger Analytics to calculate optimal menu prices for each of its 14,000 locations. The system evaluates local customer price sensitivity and competitor prices, causing significant price variations between nearby stores.
Agents (1)
- OpenAI introduced "dots," always-on AI agents running on GPT-6 Astra that operate within their own cloud computers and web browsers. David Bennett warns that adopting these constantly working tools could normalize toxic corporate expectations of 24/7 availability from human employees.
Block Brings Bitcoin to x402, Open USD Enters the Race, Trump Renames AI • Sep 25
- Zach Abrams is leaving Stripe to lead a new independent stablecoin issuer for OpenUSD. Backed by Coinbase, Visa, Mastercard, Stripe, and Shopify, the consortium is deploying one billion dollars for liquidity.
- Coinbase renewed its USDC revenue-sharing agreement with Circle in August, securing its economic terms through 2029. This agreement creates a financial headwind for Coinbase when capital migrates to competitive stablecoins like OpenUSD.
Also discussed on this episode: (9)
Media (2)
- Presidio Bitcoin Jam saw its baseline traffic increase to 600 views per episode, up from 100 to 200 views during its first year. A past episode covering a Coldcard incident reached 3,400 views.
- Presidio Bitcoin Jam changed its tagline to "open money, open intelligence" to reflect its coverage of AI and Bitcoin. This aligns with Spiral's tagline and a broader industry trend of merging open source AI with cryptocurrency.
Protocol (1)
- The X402 payment protocol specification officially merged support for Bitcoin and Lightning, driven by a pull request from Spiral developer Ben Carmen. Block subsequently announced it was joining the standard alongside Coinbase.
Lightning (1)
- Spiral developers are integrating Bitcoin Lightning payments into Mesh LLM, an open source peer-to-peer AI inference project. This enables node hosts to monetize their spare compute on a decentralized network.
Privacy (1)
- Steve Lee plans to pitch Signal's Meredith Whitaker on integrating Mesh LLM to provide private, decentralized AI capabilities. This setup would leverage Signal's existing enclaves and allow developers to monetize secure Nvidia hardware.
Models (1)
- Max notes that futurist Ray Kurzweil remains remarkably accurate with his prediction that AI will achieve human-level intelligence by 2029. Kurzweil models the technological singularity to occur in 2045.
Payments (1)
- Steve Lee argues that proving humanness is a red herring for bot prevention, citing Nikita Beer's insights on bot issues at X. Instead, metered cryptocurrency payments like X402 provide the optimal economic rate-limiting solution.
Nostr (1)
- Max successfully deployed a backup of meme-pay.dev to decentralized Blossom servers using the Insight.lol gateway and Nostr keys. This allows the web application to run permissionlessly outside traditional DNS architecture.
Startups (1)
- AI search startup Particle integrated the X402 standard into its Radar podcast indexing database. The service charges users per database query but lacks native Bitcoin and Lightning support.