The world's largest crypto exchange, Binance, continued to process trades by clients in Iran despite US sanctions and a company ban on doing business there, a Reuters investigation has found.
In 2018, the United States reimposed sanctions that had been suspended three years earlier as part of Iran’s nuclear deal with major world powers.
That November, Binance informed traders in Iran it would no longer serve them, telling them to liquidate their accounts.
But in interviews with Reuters, seven traders said they skirted the ban.
The traders said they continued to use their Binance accounts until as recently as September last year, only losing access after the exchange tightened its anti-money laundering checks a month earlier.
Until that point, customers could trade by registering with just an email address.
“There were some alternatives, but none of them were as good as Binance,” said Asal Alizade, a trader in Tehran who said she used the exchange for two years until September 2021. “It didn’t need identity verification, so we all used it.”
Eleven other people in Iran beyond those interviewed by Reuters said on their LinkedIn profiles that they too traded crypto at Binance after the 2018 ban. None of them responded to questions.
The exchange’s popularity in Iran was known inside the company. Senior employees knew of, and joked about, the exchange’s growing ranks of Iranian users, according to 10 messages they sent to one another in 2019 and 2020 that are reported for the first time.
Binance did not respond to Reuters' questions about Iran.
In a March blog post, published in response to Western sanctions on Russia, Binance said it “follows international sanction rules strictly” and had assembled a “global compliance task force, including world-renowned sanctions and law enforcement experts.”
Binance said it used “banking grade tools” to prevent sanctioned people or entities from using its platform.
The Iranian trading on the exchange could draw interest from US regulators, seven lawyers and sanctions experts told Reuters.
Binance, whose holding company is based in the Cayman Islands, says it does not have a single headquarters.
It does not give details about the entity behind its main Binance.com exchange which does not accept customers in the United States.
Instead, US clients are directed to a separate exchange called Binance.US, which - according to a 2020 regulatory filing - is ultimately controlled by Binance founder and CEO Changpeng Zhao.
Lawyers say this structure means Binance is protected from direct US sanctions that ban US firms from doing business in Iran. This is because the traders in Iran used Binance’s main exchange, which is not a US company.
But Binance does run a risk of so-called secondary sanctions, which aim to prevent foreign firms from doing business with sanctioned entities or helping Iranians evade the US trade embargo.
As well as causing reputational damage, secondary sanctions can also choke off a company’s access to the US financial system.
Binance’s exposure would depend on whether sanctioned parties traded on the platform and whether Iranian clients dodged the US trade embargo as a result of their transactions, four lawyers said.
Aske about traders in Iran using Binance, a spokesperson for the US Treasury declined to comment.
Cryptocurrencies grew attractive in Iran as sanctions took a heavy toll on the economy.
Since the birth of bitcoin in 2008, users have been drawn to crypto’s promise of economic freedom beyond the reach of governments.
Cut off from global financial services, many Iranians relied on bitcoin to do business on the internet, users said.
