US prosecutors have launched legal proceedings to seize $61 million in cryptocurrency proceeds allegedly generated from the illicit sale of Iranian crude oil and petroleum products.
The US Department of Justice filed a civil forfeiture complaint on Monday, alleging that the funds were intended for the Iranian government and its military-linked entities, including the Islamic Revolutionary Guard Corps.
Deputy US Attorney Sean S. Buckley said the action was aimed at cutting off financial resources allegedly used by Iran and groups linked to it.
“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,” Buckley said.
He added that Iran allegedly depended on illegal oil transactions to finance its military activities and support terrorism.
“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,” Buckley added.
The forfeiture action comes amid heightened military tensions between the US and Iran since February, with fighting disrupting international oil supplies and contributing to rising energy prices.
According to the DOJ, Iranian crude exports have suffered amid a US naval blockade and fighting around the Strait of Hormuz. Prosecutors allege that cryptocurrency has subsequently been used as an alternative channel to facilitate oil-related transactions and circumvent restrictions.
The department said investigators uncovered an underground financial network worth approximately $1.5 billion, identified internally as “Entity A”.
The network allegedly moved proceeds from Iranian black-market oil sales through numerous unhosted cryptocurrency wallets before transferring the funds to an Iranian cryptocurrency exchange and wallets and businesses linked to the IRGC.
Unhosted wallets are digital wallets that are not controlled by cryptocurrency exchanges or other third parties, allowing users to hold and transfer digital assets without relying on a centralised platform.
The DOJ identified two Chinese companies, Blessed Trust and Hexa Whale, as key facilitators allegedly involved in moving the funds.
According to prosecutors, the companies used Binance trading accounts to process the proceeds from the alleged black-market oil transactions before the funds were transferred back to Iran’s government and its affiliated entities.
Binance, however, said it maintains strict measures against sanctions violations and illicit financial activity.
“Binance has zero tolerance for sanctions violations or illicit activity, and Binance did not permit any transactions with sanctioned individuals. 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,” Binance’s spokesperson told CoinDesk in an email.
Prosecutors further alleged that Blessed Trust presented itself as a digital asset custody provider serving other financial institutions while offering a fiat-to-crypto conversion channel for transactions connected to Iran.
The company allegedly used US-based cryptocurrency issuers on some occasions to facilitate the transactions.
Hexa Whale was also accused of providing similar services while operating under the appearance of a legitimate commodities brokerage.
According to the DOJ, both companies had Chinese oil and petroleum product firms among their clients.
The latest case forms part of US efforts to pursue financial networks allegedly helping Iran generate revenue from restricted oil sales and move the proceeds through cryptocurrency channels.
