An investigation carried out by Reuters has found that Binance, the world’s largest crypto exchange, bypassed U.S. sanctions and maintained operations in Iran.
After the repeated U.S. sanctions against Iran, starting in 2018, Binance claimed that it would cease serving traders in Iran by liquidating their accounts.
Although the sanctions were lifted in 2020 following the signing of the Iran nuclear deal, Reuters has revealed that Iranian traders were still able to use the platform after the imposition of sanctions. Binance registration had required nothing but an email address until September last year, when it changed its anti-money laundering policies.
Binance listed Iran, Cuba, Syria, North Korea, and Crimea as “HARD 5 SANCTIONED” jurisdiction in August 2019, and the platform refused to provide services to the listed countries.
Popularity Among Iranians
Even as Binance’s position on Iran became stricter, its popularity among the country’s crypto traders continued to grow. According to traders interviewed by Reuters, the platform’s popularity was due in part to its weak background checks.
Another factor for the growth of Binance’s use in the country was that the platform was easily accessible through VPN networks, which conceal internet IP addresses linking an internet user to a specific location. Binance itself had supported the use of VPNs, as demonstrated by its “Beginners’ Guide to VPNs”, published on its website in 2020.
The Reuters investigation highlights that Binance employees were aware of its popularity among Iranians. From personal correspondence, Reuters disclosed that senior employees had joked about Iranian traders, calling them “Iran Boys.” The gaps in Binance’s compliance program made it possible for traders to continue using the platform in sanctioned territory.
Cryptocurrencies became particularly popular in Iran due to the harsh toll the international sanctions took on the country’s economy. After being cut off from global financial services, Iranians turned to crypto to facilitate the operation of businesses online. Crypto became the medium through which sanctions could be evaded, and economic freedoms gained.