Markets U.S. DOJ Seeks $61 Million for Alleged Crypto-Laundered Oil Sales by Iran

Prosecutors have initiated a civil forfeiture action targeting what they claim are illegal crypto earnings by Iran, purportedly funding its military operations.

By Omkar Godbole 10 hrs ago 3 min read

DOJ targets what it calls an illegal crypto revenue stream for Iran. (David Trinks/Unsplash)
  • The Justice Department has filed a civil forfeiture complaint seeking $61 million in cryptocurrency linked to Iran’s illicit oil sales.
  • Prosecutors allege these funds are part of a $1.5 billion network that channels oil profits through unregulated cryptocurrency wallets, an Iranian exchange, and accounts associated with the Revolutionary Guards.
  • Two Chinese firms, Blessed Trust and Hexa Whale, are accused of laundering a significant portion of these funds via Binance accounts.
  • Binance stated that it does not allow transactions with sanctioned entities and is cooperating with law enforcement.

The U.S. Department of Justice (DOJ) is pursuing what it describes as an illicit cryptocurrency revenue source funding Iran's military. On Monday, the DOJ filed a civil forfeiture complaint concerning $61 million in cryptocurrency linked to Iran's illegal crude oil sales.

The complaint asserts that these funds were intended for the Iranian government and its military divisions, including the Islamic Revolutionary Guard Corps (IRGC), which is designated as a terrorist organization by the U.S.

Deputy U.S. Attorney Sean S. Buckley stated, "Today's action demonstrates our determination to deprive the Government of Iran and its terrorist proxies of the illegal money they rely on to threaten the lives and safety of the citizens of the United States and elsewhere." He further emphasized that "The Government of Iran relies on black-market sales of sanctioned crude oil to fund its military and foster terrorism in the Middle East and around the world, along with other malign efforts to develop a nuclear program and ballistic missiles capable of delivering nuclear payloads."

This legal action occurs amidst intensifying missile conflicts between Iran and the U.S. since February, which have severely impacted global oil supply and driven up energy prices. Iran's crude exports have plummeted due to a stringent U.S. naval blockade and regional conflicts near the Strait of Hormuz. Consequently, Iran has reportedly been utilizing cryptocurrency to circumvent the blockade and sustain trade.

The DOJ report identifies a substantial $1.5 billion underground operation, referred to internally as "Entity A," that moves illicit Iranian oil revenue through a sophisticated network of unregulated cryptocurrency wallets.

Unregulated wallets, which store digital assets outside centralized exchanges or third parties, operate similarly to hiding physical cash to evade authorities. This network purportedly transferred vast amounts of illicit funds directly to an Iranian crypto exchange and digital wallets connected to the IRGC.

According to the allegations, two Chinese companies, Blessed Trust and Hexa Whale, acted as the main facilitators for the majority of these multi-million dollar transactions.

Both companies allegedly used Binance accounts to launder the proceeds from black-market oil sales before redirecting the funds back to the Iranian government and its affiliates, according to the DOJ statement.

Binance has asserted its strict policy against sanctions violations, emphasizing that it does not allow transactions with sanctioned individuals. A spokesperson for Binance stated, "We will continue to cooperate with law enforcement on this matter, and where sanctions or illicit-finance risk is identified, we will always investigate, restrict or freeze accounts where appropriate, offboard users, and report to relevant authorities."

Prosecutors pointed out that Blessed Trust, which promotes itself as a digital asset custodial services provider for other financial institutions, provided a fiat-to-crypto conversion service for these Iranian-linked transactions, sometimes using U.S.-based cryptocurrency issuers. Similarly, Hexa Whale allegedly offered laundering services while posing as a legitimate commodities brokerage.

Both companies reportedly served clientele that included Chinese oil and petroleum product firms.