Binance Faces US Probe Over Iran-Linked Trading Violations
In brief
- Binance faces US investigation into whether it knowingly allowed Iran-linked trading on its platform.
- Manhattan US attorney and DOJ criminal division are jointly handling the inquiry.
- Binance pleaded guilty to sanctions violations in 2021, paid $4.3 billion, and co-founder Changpeng Zhao was later pardoned.
- Manhattan prosecutors seek $61 million forfeiture allegedly from Iranian black-market oil sales.
- Binance disputes reports of $1 billion to $1.7 billion in flows to Iran-linked entities.
Compliance Under Fire
Binance pleaded guilty almost three years ago to failing to comply with U.S. banking and sanctions law. The exchange paid $4.3 billion in settlement and took on two corporate monitors. Co-founder Changpeng Zhao stepped down as chief executive, served four months in prison and was pardoned by President Donald Trump.
Now prosecutors want to know if those fixes were real.
The Iran-Linked Flows
Fortune reported on February 13 that internal investigators had found more than $1 billion moving through the platform to Iran-linked entities. Days later, The New York Times reported on February 23 that $1.7 billion was sent to Iranian entities. The Wall Street Journal reported on February 23 about the firings of internal investigators.
Binance pushed back hard. In a March 10 post, the exchange rejected the account, saying the money neither originated nor terminated on its platform. Binance stated that at most $126.1 million reached wallets linked to Iran after multiple hops, of which at most $24.1 million reached IRGC-related wallets. The exchange also said Iranian links surfaced only once it had begun investigating and no employee was dismissed for escalating compliance concerns.
The Legal Pressure
Manhattan prosecutors sought forfeiture of $61 million they say came from Iranian black-market oil sales and was laundered through Binance. Two Hong Kong-registered companies misrepresented their business activities, according to prosecutors. Notably, Binance was not accused of wrongdoing in the forfeiture action.
The timing matters. OFAC gave itself the power in August to designate any foreign person operating in Iran's digital asset sector, wherever they are based. Washington sanctioned firms and individuals it says finance Hezbollah and other Iranian proxies on September 10.
"We maintain a zero-tolerance policy for sanctions violations" — Binance
Frequently asked questions
Why is Binance being investigated again after settling in 2021?
Prosecutors are examining whether Binance knowingly allowed Iran-linked trading after its 2023 compliance overhaul. Reports of $1+ billion flowing to Iranian entities raised questions about whether the exchange's post-settlement reforms were genuine or if violations continued.
How much money allegedly flowed to Iran-linked entities?
Reports vary. Fortune reported $1 billion, the New York Times reported $1.7 billion. Binance disputes these figures, saying at most $126.1 million reached Iran-linked wallets after multiple hops, with $24.1 million reaching IRGC-related accounts.
What happened to Changpeng Zhao?
Binance's co-founder stepped down as CEO, served four months in prison, and was subsequently pardoned by President Donald Trump. His departure was part of Binance's 2021 settlement with U.S. authorities.
