In retaliation against Iran for the Hostage Crisis, the United States of America froze all Iranian assets.
On October 22, 1979, the Shah of Iran, Mohammad Reza Pahlevi, traveled to New York to undergo cancer treatment. On November 1, Iran's new leader, the Shiite Islamist cleric, Ayatollah Ruhollah Khomeini, led an Islamist revolution seeking a new government, arguing that the Shah was a "puppet" of US interests and that it should be deposed to impose a new government, a republic of theocratic character.
On November 4, the US embassy in Iran was surrounded by a group of around 500 Iranian students who were followers of the Islamist revolution (although the numbers vary between 300 and 2000). Fifty-two Americans were taken hostage for 444 days (from November 4, 1979 to January 20, 1981). President Carter called the victims of kidnapping "victims of terrorism and anarchy" and added that the United States was not going to give in to blackmail.
Carter refused to yield to the demands, Khomeini used the situation to consolidate his power and nullify the challenges of the moderate wing of his government, headed by its president. The euphoria over the humiliation of the most powerful nation distracted the Iranian people from the economic difficulties of their country. Carter, in April 1980, broke diplomatic relations with Iran and imposed a trade embargo, except medicine and food. Iranian funds in the US were frozen and accounted for compensate the hostages when they were released and to pay the demands of US companies against Iran.
