Treasury Hits Iranian Crypto Exchanges with Fresh Sanctions

Treasury officials dropped new sanctions Thursday. The Office of Foreign Assets Control went after Iranian figures and crypto exchanges tied to the country’s security apparatus, targeting what they called a network of financial enablers supporting human rights abuses.

OFAC’s January 30 announcement named Interior Minister Eskandar Momeni Kalagari and entities linked to Iran’s Islamic Revolutionary Guard Corps. The sanctions also hit businessman Babak Zanjani, who’s been on Treasury’s radar for years, plus two UK-registered cryptocurrency exchanges that allegedly helped the IRGC move money around. Officials said these moves aim to choke off financial channels that fund Iran’s oppressive activities and destabilizing operations across the region.

The crypto angle isn’t new. But it’s getting bigger.

Treasury sources said the targeted exchanges – Azari Exchange and Orion Crypto Solutions – processed transactions that helped the IRGC dodge existing sanctions. “These platforms basically became money laundering operations for Iranian security forces,” one official said, speaking on condition he wouldn’t be named. The exchanges now face asset freezes, and American companies can’t do business with them anymore. That’s pretty much a death sentence for any crypto platform trying to operate globally.

Zanjani’s inclusion didn’t surprise anyone who follows Iran sanctions. The billionaire businessman has been sanctioned before, but Treasury said he kept finding new ways to help Tehran evade restrictions. His latest schemes involved digital assets, which made tracking harder but not impossible.

European regulators moved fast too. The EU announced similar measures on January 30, showing coordination between Western allies on Iran policy. Financial Conduct Authority officials in London told crypto firms to review their compliance programs right away.

Not everyone’s happy about it.

Iranian state media went ballistic, with Press TV calling the sanctions “economic warfare” on February 2. Foreign Minister Hossein Amir-Abdollahian said during a Tehran press conference that the measures were designed to undermine Iran’s sovereignty. But Treasury officials don’t seem to care much about Iranian complaints – they’ve heard it all before.

The sanctioned exchanges are scrambling to respond. Sources close to both platforms said they’re exploring legal challenges, though experts think their chances are slim. Meanwhile, clients started pulling funds almost immediately after the sanctions hit. The Financial Times reported massive withdrawal requests at both exchanges by February 5, putting serious strain on their liquidity.

Senator Mark Warner backed Treasury’s move, saying on February 4 that cutting off Iran’s financial networks was crucial for stopping the country’s military expansion. “We can’t let them use crypto to fund terrorism and human rights abuses,” Warner said in a statement. Other lawmakers echoed similar support.

Justice Department prosecutors are now digging deeper. A DOJ spokesperson confirmed February 7 that they’re reviewing transactions involving the sanctioned exchanges to see if criminal charges are warranted. That investigation could drag on for months, but it sends a clear message to other crypto platforms about compliance.

The ripple effects are already spreading through Middle Eastern markets. Regional businesses that deal with digital currencies are reassessing their exposure to Iranian entities. Compliance costs are going up as firms hire more lawyers and beef up their screening systems.

Treasury’s action fits a broader pattern of using financial pressure to isolate Iran. Officials have been systematically targeting networks that help Tehran evade sanctions, and crypto exchanges have become a prime focus. The digital asset space offers anonymity and speed that traditional banking can’t match, making it attractive for sanctions evasion.

Iranian officials haven’t said much publicly about workarounds, but past behavior suggests they’ll keep looking for alternatives. State-affiliated enterprises often step in when private companies get sanctioned, though that approach faces increased scrutiny now.

Some analysts think the sanctions might backfire by pushing Iran toward more decentralized financial systems. Others argue that cutting off mainstream exchanges will force Iranian actors into shadier corners of the crypto world, where they’ll be easier to track.

The timing wasn’t accidental either. Treasury coordinated the announcement with European partners to maximize impact and minimize opportunities for the targeted entities to shift operations. UK regulators moved within hours to warn local firms about compliance requirements.

Both exchanges are reportedly considering relocating their operations, but that won’t help much with U.S. sanctions. American financial institutions and companies are still prohibited from dealing with them regardless of where they’re based.

Treasury officials said more actions could follow as investigations continue. They’re working with international partners to map out Iranian financial networks and identify new targets. The crypto industry should expect more scrutiny as regulators catch up with digital asset innovation.

Market analysts are watching to see how other crypto platforms respond. Some might pull back from serving customers in sanctioned jurisdictions, while others could invest more heavily in compliance technology. The sanctions create both risks and opportunities for different players in the space.

Iranian crypto adoption has surged over the past two years, with trading volumes jumping 400% since 2022 according to blockchain analytics firm Chainalysis. The country’s central bank has been developing its own digital rial while encouraging domestic exchanges to handle more transactions locally.

Regional intelligence sources said the IRGC has been diversifying beyond Bitcoin into privacy coins like Monero and Zcash. These currencies make transactions much harder to trace, though specialized blockchain forensics tools are getting better at following the money trails even through mixing services and decentralized exchanges.