Reuters: Binance processed Iran-related transactions totaling $8 billion in circumvention of U.S. sanctions

Since 2018, the cryptocurrency exchange Binance has processed Iran-related transactions totaling $8 billion, despite U.S. sanctions on the country. Reuters reports, citing data from blockchain-analytics tools.

According to Chainalysis, nearly the entire amount—about $7.8 billion—passed through the largest Iranian exchange Nobitex. Three quarters of these assets are denominated in Tron (TRX). Since April 2020, Binance and Nobitex have processed more than 1.15 million direct transactions in this cryptocurrency.

Transfers were also made in Bitcoin, Ethereum, Tether, XRP and Litecoin.

The data examined by journalists show that in total since 2018 between Binance and Iranian exchanges, including Nobitex, CoinNik Market, Iranicard, Rabex, Wallex, Sarmayex and Tether Land, around $2.95 billion was transferred directly in cryptocurrencies. Another $5 billion moved through intermediaries. Such \”indirect\” flows are generally an indicator of possible money laundering and sanctions evasion.

Reuters provides five tables with data on direct transactions with some Iranian platforms totaling about $1 billion in the period from August 20, 2021 to November 1, 2022.

The second most popular exchange among Nobitex’s customers is KuCoin – it processed direct and indirect transactions totaling $820 million.

“Best Option”

Nobitex, launched in 2017, positions itself as a “safe bridge between 3.5 million Iranians and the world of cryptocurrencies.” In its 2021 report, the platform said it handles 70% of Iranian cryptocurrency transactions.

According to Chainalysis, Nobitex users began moving bitcoins through Binance in April 2018.

On Nobitex’s website, the platform offers sanctions-evasion guidance, notably advising against “direct transfers” of cryptocurrency between local and foreign platforms, urging the use of Tron for anonymous trading and calling Binance the “best option for Iranians.”

In October alone, $20 million in TRX were transferred directly between Binance and Nobitex.

According to Chainalysis’s September 2022 report, from 2015 to 2022, U.S. Treasury-sanctioned Iranian wallets received more than $230,000 from ransomware programs. Most of this amount was sent to Nobitex.

Sanctions Risks

New data comes amid the U.S. Department of Justice’s ongoing 2018 investigation into Binance. It concerns possible violations of anti-money laundering and, according to three informed sources, assistance to Iran’s sanctions evasion.

Lawyers say the disclosed transactions expose the exchange to \”secondary\” U.S. sanctions with potential restrictions on access to the U.S. financial system.

Binance could also face direct \”primary\” sanctions if regulators determine that the transactions were conducted by U.S.-registered entities.

According to Binance, the main platform does not serve American citizens. A separate exchange, Binance.US, is positioned as an independent unit for them.

The vast majority of the $8 billion in Iranian cryptocurrency transactions identified by Reuters are linked to the main Binance exchange. However, the U.S. arm also processed cryptocurrency transactions totaling $1.5 million with Nobitex, Wallex and Tether Land from Iran, according to Chainalysis.

U.S.-based entities violating sanctions on Iran can face fines of up to $1 million per incident. Those involved may face up to 20 years in prison.

Nobitex and other Iranian crypto exchanges have not been targeted by U.S. sanctions. Reuters has found no evidence that sanctioned Iranian individuals, companies or organisations used Binance or Binance.US.

Binance Comments

A Binance.US spokesperson told Reuters that the data on transactions with Iranian exchanges published by the agency are not accurate.

“Direct as well as indirect data on transactions from Chainalysis combine and exaggerate the volume you cite,” he said.

After the piece, a further comment on the situation was issued by Binance’s Global Head of Compliance, Chagri Poiraz.

He said the exchange conducts rigorous KYC checks to prevent sanctioned individuals from trading. Nevertheless, Poiraz noted that Iranians living outside the country can use Binance’s services.

In his words, on-chain data does not always give a full picture of the sender’s and recipient’s intentions.

“VASP, having received a transfer from an Iranian wallet, did not necessarily intend to interact with it. It is quite possible that the provider took steps to process incoming transfers from sanctioned markets. Also, a VASP may act on behalf of a client and send funds to an address that at the time of the transaction was considered legitimate,” explained a Binance spokesperson.

Poiraz also said that recently Binance documented that one of its service providers violated security measures, which “led to a potential link with organisations in Iran.” The working group is already addressing the issue, he added.

Back in July Reuters reported that at least seven Iranian clients continued to use their accounts through September 2021. Company officials were aware of the platform’s popularity in Iran. Binance said it banned those users who had found a workaround to obtain its services.

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