US Senator Richard Blumenthal, a senior member of the Senate Permanent Subcommittee on Investigations, has launched an inquiry into cryptocurrency exchange Binance after reports suggested the platform processed approximately $1.7 billion in transactions linked to sanctioned Iranian entities and Russian oil companies.
In a letter to Binance CEO Richard Teng, the senator requested documents and internal records regarding the exchange’s sanctions controls and compliance procedures.
Reports indicate that Binance employees allegedly identified two partner intermediaries: Hexa Whale and Blessed Trust, as entities facilitating trades with Iranian government-linked organizations. Internal investigators reportedly traced transfers to wallets connected to the Islamic Revolutionary Guard Corps (IRGC) and payments to tanker crews involved in schemes to bypass Russian oil sanctions.
Allegations and Binance’s Response
The senator stated that Binance appeared to have ignored obvious red flags, knowingly allowed illegitimate accounts to operate, and even directly supported money laundering entities. He demanded correspondence, account records, and internal reports, including materials related to Iranian users and participants in Russian sanctions-busting schemes.
Binance has denied the allegations. A company spokesperson stated that the platform independently identifies and reports suspicious activity to authorities and emphasized that Iranian users are prohibited from accessing the platform.
CEO Richard Teng called the reports defamatory. Binance highlighted that it has significantly reduced transactions with sanctioned and high-risk jurisdictions, by approximately 97% since January 2024, down to about 0.009% of total trading volume. The company also emphasized the extensive compliance reforms implemented since its 2023 settlement.
Background and Compliance History
In 2023, Binance reached a settlement with regulators, agreeing to pay $4.3 billion for anti-money laundering (AML) and sanctions violations. Founder Changpeng Zhao resigned as CEO and faced regulatory scrutiny, and the exchange committed to external monitoring and strengthening compliance procedures.
Blumenthal indicated that newly surfaced information could call into question Binance’s adherence to the terms of this agreement. The senator set a deadline of March 6 for the requested materials.
The investigation focuses on the period when Binance allegedly continued transactions with sanctioned entities despite regulatory obligations. Binance insists it has reformed compliance procedures and reduced high-risk transactions significantly.
Expert Insight
Blockchain transactions are pseudonymous rather than anonymous, meaning detailed evidence could exist if regulators link specific wallets to entities like the IRGC. The depth of blockchain analysis in the Senate investigation will likely determine the case’s outcome. Historical patterns show that large financial institutions that previously settled regulatory complaints often face renewed scrutiny, illustrating the high stakes for Binance.
Source: https://coinpaper.com/14903/u-s-senator-probes-binance-over-alleged-1-7-b-in-iran-russia-trades
