Traders in Iran left Binance, the world's largest cryptocurrency exchange, only at the end of 2021, despite US "maximum pressure" sanctions imposed in 2018, Reuters reported on Monday.
Seven traders contacted by the agency stated that they continued to use Binance after the company in November 2018 asked traders in Iran to close their accounts, while another 11 who could not respond to Reuters in their LinkedIn profiles confirmed that they also continued to trade cryptocurrencies through Binance.
Iran has a complicated relationship with cryptocurrencies, which helped hide various types of trade from the eyes of the United States and opened up opportunities for illegality. In May, the Ministry of Intelligence announced that it had blocked more than 9,200 accounts belonging to 454 people used for illegal or undeclared transactions with cryptocurrencies and digital currency, the corresponding transactions totaled 600,000 billion rials, which is about $2 billion.
However, several Iranian media reports indicated that large-scale cryptocurrency mining is carried out through influential or well-connected networks, and some Chinese companies have also been located in Iran using cheap and subsidized electricity.
A study conducted in 2021 showed that 4.5 percent of the world's bitcoin production – at that time worth about $1 billion – was accounted for by Iran, which led to pressure on peak electricity supplies and repeated government assurances that the sector would be better regulated.
"Proactive approach"
Binance, which is a leader in the global crypto industry worth $ 950 billion, belongs to a holding company based in the Cayman Islands, and therefore is not subject to preliminary US sanctions. But maximum pressure has given the US government the authority to impose sanctions on third parties dealing with the Iranian banking sector, including the ability to block their access to US markets.
A Reuters report on Monday noted that the departure of Iranian traders from Binance occurred after September 2021, a month after the exchange tightened checks, including the requirement for customers to confirm their identity instead of simply registering with an email address.
Iranian Officials Monitor Crypto Mining Discovered By Police In 2021
Iranian Officials Monitor Crypto Mining Discovered By Police In 2021
In January, Reuters reported interviews with former senior Binance employees, internal mail and correspondence with national regulatory authorities, revealing previous concerns about lax compliance. This was despite previous statements, including by the CFO, that the exchange was taking a "proactive approach to detecting and suppressing money laundering," and long after Binance announced in August 2019 that it had included Iran–along with Crimea, Cuba, Syria and North Korea– in the "strict five" jurisdictions.
Evading American surveillance was attractive in Tehran. "Cryptocurrency is a good way to get around sanctions and make good money," a trader named "Ali," who said he had been using Binance for about a year, told Reuters.
Tightening American pressure?
The constant presence of Iranians on the stock exchange was well known in the company, and insiders regularly made fun of him. By September 2019, Tehran was among the best cities for Binance's Instagram followers from New York and Istanbul.
Now that 120 million users have access to various digital currencies and derivatives, Binance was founded in 2017 by "CZ" – CEO Changping Zhao – and last month hired soccer star Cristiano Ronaldo to help promote.
The departure of Iranian traders from Binance since last year, possibly due to the fact that the company was under pressure from the United States, occurred against the backdrop of continued negotiations between Iran and world powers on the restoration of the 2015 Iran nuclear agreement and the easing of US sanctions imposed when Washington withdrew from the agreement in 2018.
The apparent tightening occurred under the administration of President Joe Biden, who wants to restore the 2105 deal, and not under former President Donald Trump. A Reuters report published on Monday highlights the expectations of the U.S. government that companies should use tools that allow merchants to hide their location through virtual private networks (VPNs), which are common in Iran to evade internal verification and conceal international transactions.