Iran Allegedly Laundered $1.5 Billion In Oil Money Through Crypto. The U.S. Is Going After Some Of It.

The U.S. government is seeking to seize about $61 million in cryptocurrency that federal prosecutors say came from black-market sales of sanctioned Iranian oil to buyers in China, part of an alleged network that moved more than $1.5 billion in petroleum proceeds through digital assets.

A civil forfeiture complaint filed by federal prosecutors in Manhattan alleges that a network of companies, cryptocurrency accounts and digital wallets was used to conceal the source and ownership of Iranian oil revenue before funneling money to Iran, its agents and proxies.

At the center of the case are Blessed Trust Limited and Hexa Whale Trading Limited, two companies incorporated in Hong Kong. Prosecutors allege they used trading accounts at cryptocurrency exchange Binance to receive and transfer proceeds from Iranian crude oil and petroleum product sales and convert fiat currency into cryptocurrency.

Blessed Trust presented itself to financial and cryptocurrency service providers as a wealth management or virtual asset custody company, while Hexa Whale described itself as a commodities broker, the complaint says. Prosecutors allege both were instead providing services that helped move Iranian oil proceeds, including for clients in China's petroleum sector.

The companies also allegedly sent or received tens of millions of dollars through the U.S. financial system as part of the operation.

Investigators identified at least seven interrelated cryptocurrency addresses, collectively referred to in the complaint as "Entity A," that allegedly received and distributed more than $1.5 billion from illicit Iranian oil sales. Prosecutors say money passing through the addresses was sent to businesses associated with Iran's Islamic Revolutionary Guard Corps, IRGC-linked cryptocurrency addresses and an Iranian cryptocurrency exchange.

The transactions were structured to obscure the source, ownership and nature of the funds, with Blessed Trust, Hexa Whale and people associated with the companies playing a significant role in facilitating them, prosecutors allege.

"Today we are seizing and seeking to forfeit more than $61 million of the Government of Iran's money," Deputy U.S. Attorney Sean Buckley said in a Justice Department statement.

The Justice Department said the money would otherwise have been available to finance Iranian government and military activities. The IRGC has been designated by the U.S. as a foreign terrorist organization since 2019.

The forfeiture action does not mean the government's allegations have been proven. A civil forfeiture complaint alleges that property was involved in a crime or represents criminal proceeds, and the government must obtain a court judgment before the assets are forfeited.

The case also details how investigators intend to take control of cryptocurrency stored at the targeted addresses. The assets include USDT, the dollar-linked stablecoin issued by Tether.

Under the process described in the complaint, Tether would "burn," or permanently remove, the USDT held at the targeted addresses and issue replacement tokens of the same value. Those replacement tokens would then be transferred to a wallet controlled by the U.S. government.

Tether has previously worked with U.S. authorities to freeze cryptocurrency linked to suspected illicit activity. In April, the company said it helped freeze more than $344 million in USDT across two addresses after receiving information from U.S. authorities about activity tied to alleged unlawful conduct.

Binance told CNBC that it has "zero tolerance for sanctions violations or illicit activity" and said it did not permit transactions with sanctioned individuals. The company said it cooperates with law enforcement and investigates, restricts or freezes accounts when sanctions or illicit-finance risks are identified.

The case adds to a broader U.S. effort to disrupt the network used to sell Iranian petroleum to China and move the proceeds outside conventional financial channels.

The Treasury Department's Office of Foreign Assets Control warned financial institutions in April about sanctions risks involving China's independent "teapot" oil refineries, saying China purchases approximately 90% of Iran's oil exports and that the smaller refineries account for the majority of those imports.

A few days earlier, Treasury sanctioned Hengli Petrochemical's Dalian refinery, describing it as one of Iran's largest customers for crude oil and petroleum products. Treasury said the refinery had bought billions of dollars of Iranian petroleum and had received Iranian crude carried by vessels in the country's sanctions-evading shadow fleet.

U.S. authorities have previously targeted other networks accused of converting Iranian petroleum into revenue for the IRGC. In a separate case announced in 2024, federal prosecutors charged seven people over an alleged billion-dollar oil laundering network that sold Iranian petroleum to buyers in China, Russia and Syria and moved money through the U.S. financial system.

Rather than relying solely on conventional bank transfers, prosecutors say the operators used exchange accounts, stablecoins and interconnected digital wallets to move oil proceeds across borders while concealing their origin.

Neither Blessed Trust nor Hexa Whale has been charged with a crime in the forfeiture action, and the allegations contained in the complaint have not been proven in court.