U.S. Treasury Sanctions UK Crypto Exchanges Over Iran Sanctions Evasion

Key Insights:

• The US Treasury sanctioned Zedcex and Zedxion, marking the first time Iran sanctions affected crypto exchanges.
• Interior Minister Eskandar Momeni Kalagari was singled out for the violent repression of peaceful protestors.
• Financier Babak Morteza Zanjani allegedly used these UK-registered exchanges to process over $94 billion in transactions linked to the IRGC

The US Treasury recently took a step against the Iranian regime this week, on January 30. The Office of Foreign Assets Control (known as OFAC) recently announced sweeping new measures that targeted high-ranking officials and crypto exchanges reportedly used to hide money.

OFAC imposed these Iran sanctions to stop the regime from using digital assets to fund violence and evade international rules.

US Treasury Iran Sanctions Target Crypto for the First Time

For years, the Iranian regime has looked for ways to bypass traditional banks. As such, the latest happenings show that they have now turned to crypto. Specifically, OFAC sanctioned two UK-registered platforms, including Zedcex Exchange and Zedxion Exchange.

According to Treasury reports, Zedcex has processed more than $94 billion in transactions since late 2022. Besides, much of this money has ties to the Islamic Revolutionary Guard Corps, or IRGC.

This group is a major branch of the Iranian military, and it often handles the regime’s most sensitive and controversial projects. By targeting these exchanges, the US Treasury is cutting off a major lifeline for the regime’s shadow banking system.

Babak Morteza Zanjani and Money Laundering

One of the most important figures in this development is a man named Babak Morteza Zanjani. He is a well-known Iranian investor with a long history of financial crimes. Besides, years ago, he was sentenced to death in Iran for stealing billions from the national oil company.

However, the regime recently commuted his sentence, and officials believe they did this so he could help them move money again. Zanjani allegedly acts as a financial backer for major projects that support the IRGC.

He reportedly used Zedcex and Zedxion to carry out massive fund transfers. When Zedxion was first registered, Zanjani was even listed as its director.

Cracking Down on Human Rights Abuses

The US Treasury also aimed at the people responsible for hurting Iranian citizens, and Eskandar Momeni Kalagari (the Minister of the Interior) is now on the sanctions list.

For context, he oversees the Law Enforcement Forces, or LEF. Particularly, the LEF has a reputation for its role in crushing peaceful protests. Reports indicate that these forces have been responsible for thousands of deaths and have also carried out mass arrests and forced disappearances.

Under the leadership of Momeni, the security services have even used extreme violence to maintain control.

Other military leaders are facing new penalties too, including Majid Khademi, who leads the IRGC Intelligence Organization. These officials have planned out campaigns of intimidation and wrongful imprisonment across various provinces.

For example, in places like Tehran and Gilan, families were sometimes forced to bury their loved ones without funerals. In some cases, security forces even demanded ransom for the bodies of deceased protestors.

Why Iran Sanctions Change the Rules

Overall, Iran sanctions could set a new ball rolling for how the world handles crypto and politics. In the past, regulators usually targeted individual digital wallets. Now, they are going after entire exchanges, and this sends a very clear message to the international tech community.

Thus, if an exchange helps a sanctioned country, it will lose its ability to do business in the United States. Treasury Secretary Scott Bessent bluntly compared the regime to “rats on a sinking ship.”

He noted that they are trying to wire stolen funds to banks around the world, and the US government is determined to block these paths.