Binance faces DOJ probe over Iran sanctions after $61M forfeiture push

After months of speculation, the U.S. Department of Justice (DOJ) has officially begun probing whether Binance knowingly violated Iran sanctions. 

According to a Bloomberg report, federal prosecutors in Manhattan, New York, are reviewing whether the exchange was aware of the Iranian capital flows. The report added that the DOJ’s criminal division is also involved in the investigation.

Iran reignites regulatory headwinds for Binance

The update comes amid a heightened crackdown against what the U.S. calls “illicit funds” to the government of Iran via digital assets. Over $1 billion in crypto funds tied to the Iranian regime has been frozen by the U.S. Treasury since the Israel-Iran war began earlier this year. 

Last week, the U.S. government sought a forfeiture of $61 million from the Binance exchange. According to the DOJ, the funds were tied to Iranian black market oil sales. According to the U.S. government, the funds were being laundered by two Chinese companies on behalf of the Iranian regime. 

Part of the statement read, 

By cutting off funds raised by the black-market sale of crude oil, the Iranian military and terrorists are weakened. The FBI will not relent in its resolve to drain the funds from dangerous foreign actors.

In response to the DOJ’s push to recover the $61M, Binance CEO Richard Teng clarified that the exchange had no wrongdoing and the DOJ had not filed any case against it. 

Teng maintained that they do not tolerate sanctioned individuals and would swiftly hand any culprit to the authorities. 

A case has not been filed against the exchange yet. However, the official investigation into the sanctions violations may be bad news if the platform is indeed found culpable of wrongdoing. 

For perspective, in February, reports suggested the dismissals were linked to findings of capital flows from sanctioned Iranian entities to the platform.

What’s more?

Interestingly, the two Chinese accounts, Blessed Trust and Hexa Whale, flagged by the DOJ for $61 million forfeiture, were at the center of those February reports. 

That said, this further complicates Binance’s regulatory woes in the EU. Notably, ECB President Christine Lagarde reportedly intervened to block the exchange from getting MiCA license approval. If found guilty, it could cement the ECB’s stance against the world’s largest exchange. 

Even so, the exchange has been actively ramping up its compliance efforts and team. But whether that’s enough to clear its regulatory headwinds is unclear. 

Meanwhile, Binance still leads in net capital inflows despite ongoing regulatory hiccups across the U.S. and EU. 

Final Summary

• Binance is reportedly under DOJ review to determine whether it knowingly facilitated Iran sanctions violations. 
• The probe comes amid a $61 million forfeiture claim by the DOJ, but it didn’t scare users away, as Binance led users’ capital inflows at $1 billion.