Two Chinese companies used accounts on the cryptocurrency exchange Binance to launder illegal proceeds from the sale of Iranian oil, the Justice Department said in court papers.
In a civil forfeiture claim filed in federal court in Manhattan on Monday, prosecutors said that the two companies had moved funds intended to finance the Iranian military, including the Islamic Revolutionary Guards Corps, which the United States has classified as a terrorist organization. Binance was not charged with any wrongdoing.
A group of crypto wallets linked to Iran received more than $1.5 billion of the illegal proceeds, the complaint said, though it wasn’t clear exactly how much of that money had moved through Binance, the world’s largest crypto trading platform. The Justice Department plans to seize $61 million, currently held in a set of accounts overseen by Tether, another crypto firm, the complaint said.
The flow of illicit funds through Binance was flagged internally last year by a group of the exchange’s compliance officials, according to reports in The New York Times and other outlets. Binance fired or suspended the officials after they pointed out the Iran transactions; the company said the discipline had nothing to do with their warnings.
The reports in The Times raised concerns in Congress, where a top Senate Democrat opened an investigation into Binance. For years, the company has struggled to eliminate financial crime on its platform. It paid $4.3 billion in penalties in 2023 after pleading guilty to violating U.S. financial laws.
A Binance spokeswoman said in a statement that the exchange had “zero tolerance for sanctions violations or illicit activity.”
“This case was not filed against Binance and does not allege wrongdoing by Binance,” she said. “Binance did not permit any transactions with sanctioned individuals.”
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Binance has tried to stop illegal activity on its platform since the 2023 settlement, pledging to work with law enforcement around the world to root out financial crime. Its founder, Changpeng Zhao, stepped down as chief executive and served four months in prison.
Last year, Binance forged a business relationship with World Liberty Financial, the crypto start-up founded by President Trump and his three sons. Mr. Trump granted Mr. Zhao a pardon in October.
Around that time, the compliance officials at Binance raised internal alarms over the movement of funds to Iran, identifying the same two companies named in the complaint. Hexa Whale, a firm based in Hong Kong, used Binance to send $490 million to crypto wallets tied to Iranian entities, the employees reported. They found that another $1.2 billion had flowed to Iran-linked entities from an account owned by the financial firm Blessed Trust, a Binance business partner in Hong Kong.
The Binance investigators also learned that an account belonging to Blessed Trust’s chief executive and one controlled by a group of Binance employees had both been accessed from the same electronic device. In the exchange’s internal systems, accounts belonging to Blessed Trust and its chief executive were marked with a note: “Don’t block. Internal accounts,” The Times reported in March.
Binance has disputed many of the employees’ findings. The company said this year that Blessed Trust was “one of several vendors for Binance” and that the exchange did not control it. Blessed Trust did not immediately respond to a request for comment. Hexa Whale has ceased operations.
In the court filing on Monday, the Justice Department said that Blessed Trust and Hexa Whale had used Binance to launder the proceeds from black market sales of Iranian oil to buyers in China. The money was funneled to the Iranian government, the complaint said, and used to finance “terrorist activities,” a violation of U.S. sanctions.
Blessed Trust misrepresented to crypto and financial firms that it provided “wealth management” and other seemingly legitimate services, the complaint said.
“Today’s action demonstrates our determination to deprive the Government of Iran and its terrorist proxies of the illegal money they rely on,” Deputy U.S. Attorney Sean S. Buckley said in a statement. “The Government of Iran relies on black-market sales of sanctioned crude oil to fund its military and foster terrorism in the Middle East and around the world.”