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US Treasury Investigates Crypto Exchanges for Sanctions Evasion Linked to Iran

The U.S. Treasury Department is currently investigating whether cryptocurrency exchanges have enabled Iranian officials to evade sanctions imposed by Western nations.

Ari Redbord, a policy expert at TRM Labs, noted that investigators are shifting focus from individual wallets to the broader crypto infrastructure.

The primary concerns lie in how sanctioned entities are using exchange-linked systems to facilitate financial access.

TRM Labs identified Zedcex, a cryptocurrency exchange supposedly controlled by Iran's Revolutionary Guard Corps (IRGC), as an example of this disturbing trend.

The exchange reportedly processed about $1 billion tied to the IRGC, peaking at 87% of its transaction volume in 2024.

Last week marked the U.S. Treasury’s first-ever sanctions against cryptocurrency exchanges operating within Iran's financial sector.

Zedcex and Zedxion, both registered in the UK, received sanctions for facilitating operations for the IRGC, designated as a terrorist organization by the U.S.

Estimates indicate that Iran's crypto transactions reached $8 to $10 billion last year, reflecting a growing reliance on digital assets amid stringent sanctions.

While TRM Labs argues that most Iranian crypto flows come from retail users, the use of specialized infrastructure by state actors marks a significant shift in strategy.

As blockchain technology evolves, the challenge of sanctioning crypto transactions will likely become increasingly complex, necessitating stronger enforcement measures.