Crypto Platform Binance Helped Iranian to Trade $8 billion Despite US Sanctions

Crypto platform Binance has processed Iranian transactions worth $8 billion since 2018 despite U.S. sanctions intended to cut Iran off from the global financial system, blockchain data show.

Almost all the funds, some $7.8 billion, flowed between Binance and Iran’s largest crypto exchange, Nobitex, according to a review of data from leading U.S. blockchain researcher Chainalysis. Nobitex offers guidance on its website on how to skirt sanctions.

Three-quarters of the Iranian funds that went through Binance were in a relatively low-profile cryptocurrency called Tron that gives users an option to hide their identities. In a blog post last year, Nobitex encouraged clients to use Tron – a mid-tier token – to trade anonymously without endangering assets due to sanctions. The scale of Binance’s Iranian crypto flows – and the fact that they are continuing – has not been previously reported.

The new findings come as the U.S. Justice Department is seeking after an investigation into possible violations of money-laundering rules by Binance, which dominates the $1 trillion crypto industry, with over 120 million users. The exchanges put the company at risk of falling afoul of U.S. prohibitions on doing business with Iran, lawyers and trade sanctions experts said.

Binance didn’t respond to detailed questions about the new transactions uncovered. In a statement, representative Patrick Hillmann said, “Binance.com is not a U.S. company, unlike other platforms that have exposure to these same U.S. sanctioned entities. However, we have taken proactive steps to limit our exposure to the Iranian marketplace,” working with industry partners and internal tools. Binance declines to give details of the location or the entity behind its Binance.com exchange.

In August 2021, Binance reported that customers would no longer be able to open accounts and use its services without identification. But since then, the platform has processed almost $1.05 billion in trades directly from Nobitex and other Iranian exchanges, according to the Chainalysis data, which runs to November of this year. Since Zhao’s tweet in July, Binance has processed around $80 million in Iranian exchanges.

Hillmann said in the Binance articulation that the company needs full “Know Your Customer” checks for all users and residents of Iranians are restricted from opening or maintaining an account. We are continually updating processes and technology as we learn about new risks and potential exposures. As a result of these efforts, including continuous exchange monitoring in coordination with external vendors, between June 2021 and November 2022, Binance’s exposure to Iranian-linked entities has seen an exponential decline.

A further $5 billion in crypto moved between Iranian trades and Binance through layers of intermediaries, the data also reveal. Regulators say such “indirect” flows should be a red flag to crypto exchanges – an indicator of possible money laundering and sanctions avoidance. Crypto users seeking to cover their tracks often use sophisticated methods to create complex chains of crypto transfers.

Nobitex prompts its 4 million clients on its site to keep away from the direct transfer of crypto among Iranian and foreign crypto platforms to keep up with security.