Covert Crypto Channels: New Findings on Iran’s Financial Maneuvers

An investigative report has brought to light the secretive financial operations of the Iranian Revolutionary Guard Corps (IRGC) involving the transfer of $1 billion through cryptocurrency exchanges in the UK since 2023. Compiled by TRM Labs and published by the Washington Post, the report details how Iran has developed a sophisticated cryptocurrency network to evade international sanctions, with transactions facilitated by seemingly legitimate financial monitoring systems in London.

The Mechanics of the UK-Registered Exchanges

TRM Labs discovered that two cryptocurrency exchanges, Zedcex and Zedxion, act as dual faces of a single operation aimed at clandestine financial activities. A staggering 56% of transactions from 2023 to 2025 on these platforms were linked to IRGC wallets. The favored medium for these transactions was Tether‘s USDT on the Tron network.

The scale of IRGC activities has escalated notably, with transfers rising from $24 million in 2023 to $619 million in 2024, and continuing to $410 million in 2025. Analysts interpret this surge as an indicator that Iran is leveraging cryptocurrency not just as a payment alternative but as a complex shadow banking network.

Researchers employed a strategy of small deposits and withdrawals to scrutinize these exchanges’ internal structures. This method allowed for the mapping of 187 transactions associated with wallets allegedly under IRGC control, according to Israeli intelligence.

How Are Cryptocurrency Channels Supporting Sanction Evasion?

The investigation uncovered significant transfers, such as a $10 million transaction from an IRGC-associated wallet to a Yemeni individual’s account. This individual had previously been sanctioned by the United States for contraband oil activities benefiting the Houthis, underscoring crypto’s role in financing proxy engagements across the region.

TRM Labs also connected the exchanges to Babek Zencani, a businessman formerly involved in aiding Iran’s oil sanction evasions. His past efforts in constructing alternative financial avenues for Iran have seemingly transitioned into the digital sphere, as demonstrated by his recent release from imprisonment after a partial pardon.

Both exchanges assert their compliance with anti-money laundering laws on their platforms. Interestingly, Zedcex lists Iran as prohibited, while Zedxion lacks such restrictions. Despite inquiries, there was no response from the exchanges, Iran’s UN mission, or the UK’s Sanctions Office.

“Our findings reveal a parallel financial system crafted through digital assets, striving to dodge traditional economic controls,” a spokesperson from TRM Labs noted.

Concrete conclusions from the study:
– Significant use of Tether’s USDT on the Tron network.
– Hidden operations under the guise of two brand names.
– Reemergence of old sanction-evasion tactics in the crypto realm.
– Potential global security implications due to the financing of proxy groups.

The investigation raises pressing questions about the unchecked nature of cryptocurrency exchanges and their role in shadow transactions. These revelations hint at a pressing need for increased regulatory scrutiny and diplomatic engagement to curtail illicit financial flows.