U.S. DOJ seeks $61 million in what it calls Iran's crypto-laundered black market oil sales

U.S. prosecutors are targeting what they call an illicit cryptocurrency revenue stream funding Iran's military.

On Monday, the Department of Justice (DOJ) filed a civil forfeiture complaint against $61 million in crypto proceeds linked to Iran's black-market sales of crude oil and petroleum products.

The filing alleges the funds were destined for the Iranian government and its military branches, including the Islamic Revolutionary Guard Corps (IRGC), a U.S.-designated terrorist organization.

"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," Deputy U.S. Attorney Sean S. Buckley said.

“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 legal action comes amid escalating missile warfare between Iran and the U.S. since February. The conflict has severely disrupted global oil flows and triggered a sharp rise in energy prices worldwide. Iran’s own crude exports have tanked due to a strict U.S. naval blockade and regional fighting around the Strait of Hormuz. In turn, Iran has reportedly been using crypto to bypass the blockade and keep trade flowing.

According to the DOJ statement, prosecutors identified a massive $1.5 billion underground pipeline, internally dubbed "Entity A,” that moved black-market Iranian oil money through a complex web of unhosted cryptocurrency wallets.

Because unhosted wallets store digital assets outside of centralized exchanges or third parties, they function much like stashing physical cash in a house to prevent authorities from freezing it. This network transferred massive sums of illicit cash directly to an Iranian crypto exchange, as well as digital wallets and businesses tied to the IRGC.

Two Chinese companies, Blessed Trust and Hexa Whale, allegedly acted as the primary facilitators coordinating the vast majority of these multi-million dollar transfers.

Both firms used trading accounts on Binance to launder the black-market oil proceeds before funneling the funds back to the Iranian government and its proxies, the statement said.

Binance stated it has zero tolerance for sanctions violations and did not permit transactions with sanctioned individuals.

“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 noted that Blessed Trust, which markets itself as a digital asset custodial services firm for other financial providers, offered a fiat-to-crypto conversion ramp for these Iran-linked transactions, occasionally utilizing U.S.-based cryptocurrency issuers. Meanwhile, Hexa Whale allegedly provided similar laundering services while masquerading as a legitimate commodities brokerage.

Both entities counted Chinese oil and petroleum product companies among their clientele.