TL;DR
- The U.S. Department of Justice filed a civil forfeiture lawsuit for $61 million in cryptocurrencies linked to illegal Iranian oil sales.
- The funds would have been directed to the Iranian government and the Islamic Revolutionary Guard Corps, designated a terrorist organization by the U.S.
- Two Chinese companies, Blessed Trust and Hexa Whale, allegedly acted as facilitators using Binance accounts to launder the funds.
The United States Department of Justice filed a civil forfeiture lawsuit against $61 million in cryptocurrencies that, according to the indictment, originate from illegal sales of crude oil and Iranian petroleum derivatives on the black market.
The funds would have been channeled to the Iranian government and its military branches, including the Islamic Revolutionary Guard Corps (IRGC), designated a terrorist organization by Washington.
Iran Turns to Cryptocurrencies to Evade Sanctions and Blockades
“Today we demonstrate our determination to deprive the Iranian government and its terrorist proxies of the illegal money they use to threaten the lives and safety of citizens of the United States and other countries,” stated deputy prosecutor Sean S. Buckley. The official also noted that Iran funds its nuclear program and ballistic missile development through these oil sales.
The lawsuit accompanies the military escalation between both countries, which has disrupted the global flow of oil and driven up energy prices. The U.S. naval blockade around the Strait of Hormuz would have pushed the Persian nation to turn to cryptocurrencies to sustain its foreign trade.
The “Entity A” Network and the Role of Non-Custodial Wallets
According to the DOJ statement, prosecutors identified an underground circuit valued at $1.5 billion, internally referred to as “Entity A“, which moved funds through a network of non-custodial cryptocurrency wallets. This type of wallet stores digital assets outside of exchanges or centralized third parties, making it difficult for authorities to freeze them, similar to keeping cash at a private residence.
Chinese companies Blessed Trust and Hexa Whale allegedly acted as the main facilitators, using accounts on Binance to launder the funds before transferring them to the Iranian government and the IRGC. Blessed Trust presents itself as a digital asset custody firm and would have offered fiat-to-cryptocurrency conversion using U.S.-based issuers. Hexa Whale, for its part, operated undercover as a commodities brokerage. Both firms counted Chinese companies in the oil sector among their clients.
Binance stated in a press release that it has zero tolerance for sanctions violations and that it will cooperate with authorities in the investigation.
