Media: Binance served users from Iran bypassing US sanctions

Media: Binance served users from Iran bypassing US sanctions

Media: Binance Served Iranian Users Bypassing US Sanctions

Binance Cryptocurrency Exchange continued to serve Iranian customers, bypassing US sanctions and a ban on doing business in that country. This is evidenced by the results of a Reuters investigation.

In 2018, the US authorities re-imposed sanctions suspended as part of Iran's deal with major states to curtail its nuclear program. In November of the same year, Binance informed local traders that it would no longer serve them and suggested that they liquidate their accounts.

However, according to Reuters, at least seven Iranian clients of the exchange continued to use their accounts until September 2021. They only needed an email address to register. They only lost access to the platform after Binance tightened anti-money laundering checks.

“There were several alternatives, but none of them were as good as Binance. Identity verification was not required, so we all used this exchange,” said Tehran-based trader Asal Alizadeh, who used the platform for two years until September 2021.

Eleven other people in Iran, in addition to those interviewed by Reuters, reported on their LinkedIn profiles trading cryptocurrency on Binance after the 2018 ban.

Traders said they were attracted to Binance by weak KYC checks, high liquidity, and a large number of cryptocurrencies. Some of them easily bypassed restrictions using VPN services.

“Cryptocurrency is a good way to get around sanctions and make money,” said trader Ali, who used Binance for about a year.

He shared with Reuters correspondence with the exchange's support team, which announced the closure of his account in 2021 in accordance with “the recommendations of the UN Security Council.”

Senior employees of the company were aware of the increase in the number of Iranian users. This is indicated by the messages they sent to each other in 2019 and 2020, the agency writes.

“IRAN BOYS,” wrote one of them in response to data showing the popularity of Binance on Instagram in Iran.

Another jokingly offered to advertise this fact: “Promote it on Binance U.S. Twitter.”

In April 2020, an unnamed senior official noted in a correspondence that Iranian traders were using Binance, without specifying how he learned this. The exchange's compliance document from the same year, reviewed by Reuters, gave Iran the highest illicit financing risk rating of any country.

The exchange did not comment on this information.

News about Iranian trading on Binance could attract the attention of US regulators, lawyers say. The exchange's extensive structure does not protect it from the risk of secondary sanctions that prevent foreign firms from doing business with blacklisted entities. This can not only damage reputation, but also deprive the company of access to the US financial system.

How Binance hides the legal structure from regulators and users

Reuters found no evidence that sanctioned individuals used Binance.

Recall that in March, in response to Western sanctions against Russia, Binance stated that it “strictly complies with the rules of international sanctions.” 

The exchange reported the use of “bank-grade tools” to prevent sanctioned individuals or entities from using its platform.

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