Did Binance Help Iran Avoid Financial Sanctions?

Did Binance Help Iran Avoid Financial Sanctions?

December 13, 2022

Iran is a sanctioned country. It’s not allowed to engage in certain activities unless the United States says so. Despite all this, popular digital currency exchange Binance still enabled the country to engage in crypto trades nearing $8 billion at press time.

Binance Is Alleged to Have Aided Iran

Almost all the trades occurred between Binance and Nobitex, a crypto exchange based in the Middle Eastern country. This data comes directly from blockchain analysis firm Chainalysis, which recently produced a report discussing how sanctioned countries will often use crypto to avoid financial penalties.

Back in July, it was stated by various media outlets that Binance knew about what was going on in Iran and did nothing about it. People working within the realms of the exchange were aware that the company was quite popular in Iran, and thus they continued to offer services to the sanctioned region. At around the same time, Binance executive and founder Changpeng Zhao issued the following tweet:

Binance banned Iranian users after sanctions. Seven got missed/found a workaround. They were banned later anyways.

In a statement, Binance spokesman Patrick Hillmann explained:

Binance.com is not a US company, unlike other platforms that have exposure to these same US sanctioned entities. However, we have taken proactive steps to limit our exposure to the Iranian marketplace.

Not long ago, Binance stated that the company was going to be implementing complete know your customer (KYC) protocols to ensure that all its customers were who they claimed to be. Hillmann continued his statement with the following:

Residents of Iran are prohibited from opening or maintaining [accounts]. We are continually updating processes and technology as we learn about new risks and potential exposures. As a result of these efforts, including real-time transaction monitoring in coordination with external vendors, between June of 2021 and November of 2022, Binance’s exposure to Iranian-linked entities has seen an exponential decline.

Hillmann also hinted that so long as accounts are vetted and checked for wrongdoing, Binance shouldn’t be labeled an illicit exchange. He says that the company goes through great lengths to make sure all the activity occurring through its wallets remains clean and that it is also quick to report anything unusual it might see. He said:

What’s important to note is not where the funds come from, as crypto deposits cannot be blocked, but what we do after the funds are deposited.

The Firm Has Been in the News a Lot

Not long ago, the crypto exchange made headlines when it suffered a breach that saw close to $600 million in digital funds stolen from its hot wallets. Discussing the hack, Zhao commented with:

An exploit on a cross-chain bridge, BSC Token Hub, resulted in extra BNB. We have asked all validators to temporarily suspend BSC. The issue is contained now. Your funds are safe.

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