The report warns avoiding penalties by encryption is an ongoing problem

According to mounting physical evidence collected by Chainalysis, cryptocurrencies are being used to evade economic sanctions. This is not a new problem, but the problem is escalating. A significant portion of the illicit money has flowed in recent months between Binance and Iran’s largest cryptocurrency exchange, Nobitex. Most of the transactions were reportedly in the low-level cryptocurrency Tron, making it easy for users to hide their identities.

Penalty violators

New Dinar Supra a report It highlights a worrying trend. She cites a Reuters article last November that accused Binance of aiding Iranian firms in $8 billion in trade. This happened in the face of US sanctions targeting Iran.

According to Reuters (citing Chainalysis data), the flow of cryptocurrency transactions between Binance and Iran’s largest cryptocurrency exchange, Nobitex, enabled Iranian companies to circumvent sanctions and transact around $8 billion. Moreover, three-quarters of the funds were in the form of TRON. This “low-level” cryptocurrency helps users stay anonymous and off the grid. In short, it facilitates covert and criminal operations. (Binance has since delisted TRON, whose founder Justin Sun faces enforcement action from the SEC.)

Other data collected by Chainalysis and reported by Reuters is concerning. In a recent preview of its 2023 Crypto Crimes Report, Chainalysis stated that in the past year, illicit transactions involving cryptography rose for the second year in a row. In total, it amounted to 20.1 billion dollars. The highest number ever. According to Chainalysis, 44% of the total deal flow was activity involving governments or sanctioned organizations.

Some people value blockchain technology for its decentralized nature and its promotion of privacy in transactions. Unfortunately, as these numbers remind us, the unauthorized systems involved in blockchain can be used for good and ill.

And since cryptocurrency exchanges largely set their own rules, they can find themselves making deals that would normally be impossible.

Regulators target crypto addresses

The J.D. Supra report shows that governments and law enforcement agencies are not passive in confronting the problem. They are taking action against those who violate economic sanctions through the use of crypto assets.

OFAC not only imposed sanctions against violators. Recently, OFAC expanded its operations to target cryptocurrency addresses associated with bad parties.

And in the UK, lawmakers have introduced regulations requiring crypto companies to report any violations of OFAC financial sanctions.

Tougher penalties

The J.D. Supra report says that as trends have worsened, governments and other regulators may have revised their approach. They will need to step up enforcement efforts to ensure that penalties have teeth. A tougher approach could help stem the flow of illicit transactions and money laundering.

But the report makes it clear that this will not be a quick and simple fix. The problem is complex and issues of bypassing regulations emerge. Officials, in their zeal to pursue sanctioned violators, should be careful not to interfere with the rights of legitimate crypto users.

On the downside, we may see more restrictive regulation, such as in OFAC’s decision to sanction the Tornado Cash program protocol. This could lead to potential ramifications for the legitimate actors with whom you interact.

The good news is that – according to Chainalysis – cryptocurrency services, in general, are mostly cooperative in the face of governments’ requests for help. Exchanges realize that denigrating the name of a cryptocurrency is not helped by rogue states breaking sanctions.

Regulating cryptocurrencies to ensure compliance with economic sanctions is a complex task. It requires cooperation between governments and regulators, as well as cooperation of cryptocurrency exchanges. Only then can we hope to reduce the use of cryptocurrencies to evade economic sanctions.


Adhering to the Trust Project’s guidelines, BeInCrypto is committed to providing unbiased and transparent reporting. This news article aims to provide accurate and timely information. However, readers are advised to independently check the facts and consult with a professional before making any decisions based on this content.

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