Israeli authorities have moved to confiscate 137 cryptocurrency wallets, collectively holding an estimated $1.5 billion in USDT, citing connections to Iran’s Islamic Revolutionary Guard Corps (IRGC).
The Ministry of Defense identified these wallets as potential vehicles for terrorist financing, with many of the addresses using TRON-based USDT—a chain that has previously been linked to illicit transactions.
The wallets were flagged as property of the IRGC, a group sanctioned by multiple jurisdictions including the US, UK, Canada, and the EU.
While TRON remains less scrutinised than Ethereum, analysts noted that a recent hack of the Iranian exchange Nobitex involved TRON-based transfers, suggesting deliberate targeting of IRGC crypto operations.
Researchers from Elliptic traced Nobitex connections to the IRGC, largely through vanity addresses.
Despite the estimated $1.5 billion associated with the seized wallets, only around $1.5 million remains accessible.
Much of the activity occurred in early 2025, with the bulk of transfers already processed.
The official seizure order listed Ethereum addresses for the wallets, though TRON formats were predominantly used for the USDT holdings.
The USDT stablecoin’s built-in blacklisting feature has allowed partial freezing of the IRGC-linked funds.
Of the 187 addresses highlighted by Israel’s National Bureau for Counter Terror Financing (NBCTF), 39 were blacklisted by Tether on 13 September, halting roughly $1.5 million in transactions.
Tether’s actions follow ongoing collaboration with the T3 Financial Crime Unit, which has historically frozen $100 million USDT across 2,459 addresses linked to scams and illicit activity.
However, most of the funds remain outside the reach of direct freezes, reflecting the inherent challenge of controlling permissionless blockchain transactions.
On-chain activity continues near peak levels despite these enforcement measures.
The IRGC’s use of cryptocurrency spans several years.
In June 2025, over $90 million was stolen from Nobitex by a pro-Israel group, with funds sent to addresses containing variations of “F*ckIRGCterrorists.”
In December 2024, the US Treasury sanctioned addresses that received $332 million USDT tied to IRGC-Qods Force operations, including financing the Houthi militant group in Yemen.
More recently, the US Justice Department seized $584,741 USDT from Iranian national Mohammad Abedini, linked to military drone programs used by the IRGC.
Elliptic has moved to ensure that the newly seized addresses are visible for screening, allowing exchanges and users to avoid interactions with IRGC-linked wallets.
The company stated,
“Users will now be able to ensure that they do not inadvertently process funds originating from – or being sent to – addresses included in the seizure order.”
While USDT freezes are rare and typically handled on an ad-hoc basis in collaboration with exchanges, this latest seizure illustrates how authorities and industry partners can work together to track high-value transactions linked to terrorism.
Yet, the broader crypto market continues to operate largely on a pseudonymous basis, limiting the practical reach of enforcement measures beyond blacklisting and freezing known wallets.
Even with $1.5 billion linked to sanctioned addresses, the real impact of these seizures remains uncertain.
Analysts note that many of the wallets may belong to infrastructure or services that facilitate multiple transactions, making it difficult to confirm direct IRGC control.
Still, the move highlights growing scrutiny of TRON-based USDT and reinforces ongoing efforts to cut off crypto funding for sanctioned entities.
Coinlive observes that while high-value wallet seizures grab headlines, the pseudonymous nature of blockchain raises questions about their true effectiveness.
Could billions in digital assets continue to circulate undetected despite blacklists, challenging traditional notions of financial control?
This case sparks a provocative discussion on whether regulatory reach can ever fully match the speed and ingenuity of crypto networks.
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