Reuters recently [again] accused Binance of processing transactions from Iran worth over $8 billion despite U.S. sanctions. And this is not for the first time.
💡 More on the topic: Reuters earlier this year already accused Binance of violating the sanctions against Iran. Another huge exchange Kraken is presumably under federal investigation for the same reasons. Also this summer Iran announced its first international cryptopayment which could have been a sign of U.S. sanctions losing power.
According to Chainalysis data, the report says that Iran's largest crypto exchange, Nobitex, channelled around $7.8 billion through Binance ($2.8 billion moved directly from Iran to Binance, and $5 billion were transacted through intermediaries). The transactions were mostly made in Tron, which allows anonymity.
Earlier (after similar accusations previously) Binance stated that they “blocked all access to the platform to anyone based in Iran as they implemented more advanced complex detection tools that allowed them to further crack down on users in sanctioned regions that had access to sophisticated masking tools”.
As this new investigation came out, Binance’s Global Head of Sanctions Chagri Poyraz posted another blog on Binance stating “On Binance, Iran and Why We Need to Do Better as an Industry”.
He dwelled on the question of “how do we keep sanctioned individuals from accessing our platform while simultaneously extolling the values of decentralization”, saying that currently no exchange including Binance has managed to solve this issue. The main problem according to him is that “one cannot ever clearly determine intent from the blockchain data alone”. For the most part the post consists of clichés, promises and appeals to other industry players to work together on making crypto clean and legal.
Poyraz says that the company invests in KYC transaction monitoring technology “with some of the strictest protocols in the industry” and does everything possible to solve the problem. At the same time he stressed that Binance is “not a US company required to follow American law”.
Poyraz confesses that there were some interactions with Iran, but his words sound as if it’s not a big deal at all:
“Earlier in the week, we discovered that Binance interacted with certain Iran-based nexuses. As soon as we discovered this, we moved to freeze transfers, block accounts and follow the protocol set up by our compliance team”.
There is no direct reply to the accusations in the post, but these words sound a bit like excuses:
“It could be likely that the VASP that received the transfer from the Iranian wallet had no intention of interacting with them and it is also likely that the VASP had measures and protocols in place to deal with inbound transfers from these sanctioned markets”.
Another recent investigation from Reuters stated that Binance and CZ were avoiding scrutiny from SEC and that the world’s largest exchange doesn’t get along with U.S. authorities as it is trying to show. It also says that since the end of last summer when Binance tightened KYC and check-ups, Iranian crypto exchanges Wallex and Sarmayex have used Binance to move crypto worth at least $29 million.
What do you think about this situation? Is Binance really trying to comply with U.S. laws or this is just for show? And how would you solve the crypto exchanges dilemma of balancing control and decentralization?
