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The U.S. Department of Justice will conduct an investigation to determine whether Iran has utilized the largest cryptocurrency exchange, Binance, to circumvent international sanctions. The inquiry will also assess if the platform has provided support to the Houthis in Yemen.
American authorities suspect that over $1 billion has flowed through the exchange to finance armed groups backed by Iran, including in other nations. This figure was mentioned in an article by The Wall Street Journal. The Justice Department aims to verify the accuracy of the information published by the journal, as well as whether Binance itself or its users have violated sanctions.
Previously, Binance initiated an internal review regarding sanction evasion but soon halted it. Subsequently, the exchange dismissed several employees who identified violations of the sanctions regime, according to sources from Fortune. Later, a group of 11 U.S. lawmakers, led by Massachusetts Senator Elizabeth Warren, urged federal authorities to investigate Binance for compliance with sanctions and anti-money laundering (AML) requirements.
In response, Binance stated that the investigation initiated by the senators is based on “clearly false and defamatory” information.
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“Recent publications that form the basis of your investigation are evidently false, lack credible evidence, and tarnish the company’s reputation in several significant aspects,” representatives of the exchange stated in a letter to the senators.
Binance claims that Hong Kong companies Hexa Whale and Blessed Trust, which are mentioned in the Senate investigation, had indirect interactions with wallet addresses suspected of connections to Iran. Binance assured that it initiated an investigation in response to law enforcement inquiries and removed these service providers from its platform. According to the company, no Binance account directly conducted transactions with organizations from Iran.
At the end of February, several media outlets accused Binance of aiding the Islamist regime. According to The New York Times, an internal investigation by Binance uncovered over 1,500 accounts on the platform that were accessed from Iranian territory. The publication asserted that approximately $1.7 billion was transferred from two Binance accounts to organizations linked to the Iranian authorities, including wallets associated with the Islamic Revolutionary Guard Corps (IRGC). The Wall Street Journal claimed that around $500 million in USDT passed through Hexa Whale Trading for the benefit of the IRGC.
Earlier, in January, an investigation by Elliptic connected Iran’s largest cryptocurrency exchange, Nobitex, with financial activities of the IRGC. Elliptic analysts reported that the Central Bank of Iran used the platform to support the rial’s exchange rate by purchasing USDT worth approximately $507 million.
