Report: Iranian Exchanges Linked to Government and Sanctions Evasion

Most Iranian centralized cryptocurrency exchanges are linked to the government and participate in the country’s evasion of sanctions, according to OSINT researcher Maria Noor.

Current status of Iran’s local cryptocurrency Exchanges: Tens of Millions of Users and Severe US Sanctions

By @MARIANOOR_BTC

Nobitex, Excoino, Wallex, and Bit Pin are four major CEXs in Iran. 15 to 19 million Iranians are active in the cryptocurrency market. Most Iranian CEXs… pic.twitter.com/rwtTFLzwtm

— Wu Blockchain (@WuBlockchain) October 22, 2024

Due to primary and secondary US sanctions, international digital asset platforms are prohibited from providing services to users from Iran. The implementation of strict AML/KYC rules has made legal access to these services from the country virtually impossible, the expert noted.

Since mid-2017, following the tightening of the sanctions regime during Donald Trump’s presidency, local entrepreneurs have actively launched cryptocurrency exchanges to fill the resulting void.

Current Landscape

According to the study, there are 90 crypto trading platforms operating in Iran. Of these, more than 10 function as centralized exchanges with websites and applications. The segment comprises approximately 15-19 million active users.

The largest CEX in the country is Nobitex, founded in 2017. The platform claims a client base of about 5.7 million accounts, with 68 million transactions annually.

According to Noor, the main shareholders of the exchange are a relative of Iran’s Supreme Leader Ayatollah Ali Khamenei and a business partner of the founder of the Islamic Revolutionary Guard Corps (IRGC) and its first commander, Mohsen Rezaee. Both stakeholders manage the platform through their representatives.

“Investigations by Iranian sources, industry insiders, and OSINT data indicate that Nobitex has ties to the Iranian government and the IRGC and may collaborate with authorities in violating international and US sanctions related to money laundering and terrorism financing,” the expert emphasized.

The top four centralized exchanges in the country also include Excoino, Wallex, and Bit Pin. Chainalysis specialists classified the latter in their report as a medium-risk category due to ties with a sanctioned entity.

Bit Pin is affiliated with a subsidiary of Arya Hamrah Samaneh, which is used by authorities to circumvent US restrictions in the telecommunications and computer equipment sector.

Sanctions Evasion and Risk of Account Freezes

In 2022, Chainalysis reported that since 2018, Binance processed $8 billion worth of Iran-related transactions. Nearly the entire volume — about $7.8 billion — went through Nobitex. Analysts mentioned several other platforms in the Asian country, including Wallex.

In November 2023, Binance settled allegations from the US Department of Justice regarding sanctions violations and money laundering by agreeing to pay $4.3 billion. The personal fine for co-founder and former CEO Changpeng Zhao was $50 million. In September 2024, the entrepreneur was released after serving a four-month sentence.

In May, US Senators Elizabeth Warren and Angus King drew attention to the administration regarding Iran’s sanctions evasion through cryptocurrency operations, including mining. It was also revealed that the Islamic Republic and Russia are exploring the possibility of using digital financial assets and CBDCs in mutual settlements.

Against this backdrop, Nobitex users began to complain en masse on social media about account and wallet freezes after transferring funds from the exchange to international platforms, Noor noted.

The concerns of Iranian crypto investors in this regard have intensified following the mass identification of addresses by analytical services Arkham and TRM Labs. According to the researcher, Nobitex clients’ worries about potential asset freezes are well-founded.

She also highlighted another risk — the platform, like other CEXs in the country, is under close scrutiny by local authorities.

Noor believes that in the current conditions, local users should exercise caution and consider decentralized platforms.

“The prospects for using cryptocurrencies in Iran are complex and fraught with challenges,” she concluded.

Back in 2022, the American exchange Kraken paid $362,000 for violating sanctions against Iran from 2015-2019.