Main Points：
- The U.S. Treasury (OFAC) has sanctioned two Iranian financiers plus dozens of companies in Hong Kong and UAE, accusing them of using “shadow banking” networks and cryptocurrency to move over US$100 million in funds derived from Iranian oil sales to support military entities (IRGC-QF, MODAFL).
- These networks use front companies, shell entities, overseas firms, and crypto wallets to obscure the trail of money, evading sanctions.
- The action is part of a broader “maximum pressure” campaign by the U.S., using Executive Orders (e.g. E.O. 13224) to disrupt funding for Iran’s weapons programs, regional proxy groups, missiles, and UAVs.
- Chainalysis reports that in 2024, sanctioned jurisdictions like Iran received about US$15.8 billion in crypto, making up ~39% of all illicit crypto transactions.
- The recent sanctions come on top of previous actions targeting similar shadow banking networks, oil smuggling, and tanker/shipping operations (“shadow fleet”).
1. What exactly has been sanctioned and by whom
On September 16, 2025, the U.S. Department of the Treasury, through OFAC, designated Alireza Derakhshan and Arash Estaki Alivand, along with more than a dozen individuals and corporate entities based in Hong Kong and the United Arab Emirates. These parties are accused of purchasing and coordinating over US$100 million in cryptocurrency related to oil sales from Iran, and using a network of front companies and overseas shells to transfer those funds into the Iranian regime’s military arms — specifically the Islamic Revolutionary Guard Corps – Qods Force (IRGC-QF) and Ministry of Defense and Armed Forces Logistics (MODAFL).
The sanctions are under Executive Order 13224, which is aimed at counterterrorism, and also part of the Trump administration’s National Security Presidential Memorandum 2 directing “maximum pressure” on Iran.
2. How the shadow network operates using crypto and front companies
These networks use an elaborate web of front companies (in Hong Kong, UAE, etc.), shell entities, false or misleading documentation or trade invoices, and cryptocurrency wallets to move funds. Crypto is used not just as a payment method but as a layering mechanism — obscuring flows, splitting funds, using multiple jurisdictions. The “inflows” connected to the designated addresses are reported to be on the order of US$600 million in total, though “only” ~US$100 million are directly tied to oil-for-crypto purchases.
By using cryptocurrency, these shadow banking networks reduce reliance on traditional banking channels which are more easily monitored, regulated, or blocked. They also make it more difficult for sanctions enforcement to follow the money: crypto wallets, mixing, chain hops, etc.
3. Broader trends: increasing use of crypto in sanctions evasion, and increasing enforcement
The U.S. has repeatedly said that Iran has leaned more heavily on cryptocurrency as sanctions tighten. For example, in 2024, about US$15.8 billion in crypto flowed into or through Iran or other sanctioned jurisdictions, which accounted for ~39% of all illicit crypto transaction volume.
Meanwhile, enforcement is stepping up: past months have seen sanctions not only on financial facilitators but shipping networks, oil smuggling entities, and entire “shadow fleet” operations. Notable earlier actions include sanctioning the Zarringhalam brothers for laundering billions via exchange houses and front companies.
4. Impacts & Risks for Crypto, Blockchain, and Related Businesses
- Entities (companies, individuals) doing business or even touching any transaction connected with the sanctioned persons/entities risk secondary sanctions. U.S. persons and firms are prohibited from transacting with them.
- Crypto services, exchanges, wallet providers, DeFi protocols could be used (knowingly or unknowingly) in laundering or facilitating such flows, which increases compliance costs, risk of de-listing/warning by regulators, or exposure to sanctions.
- Blockchain analytics firms are increasingly important: tracing wallet flows, mapping usage of front companies, identifying addresses. That also means increased surveillance and fewer safe “grey areas” for actors trying to hide behind anonymity.
5. Recent developments & what to watch going forward
- Governments are moving to reimpose or activate UN sanctions (snapback mechanisms), especially in relation to Iran’s nuclear deal compliance.
- More designations are likely: more individuals, front companies, exchange houses, money changers (sarafs), and operators in jurisdictions known for looser regulation (Hong Kong, UAE, etc.).
- Crypto firms will come under pressure from regulatory authorities to implement more robust Know-Your-Customer (KYC), Anti-Money Laundering (AML), and counter-terror financing measures.
- Also, more cases where crypto is used in combination with non-crypto shadow banking (smuggling, oil trade, false invoicing, front companies) will draw enforcement attention.
Conclusion
These recent measures underscore a larger pattern: crypto is no longer a fringe tool for sanctions evasion, but a central component of how sanctioned states like Iran attempt to access revenue, particularly from oil. For anyone interested in exploring new crypto assets, or engaging in business that intersects with blockchain and crypto, there are several implications:
- Blockchain transparency tools are not only useful for innovation but increasingly essential for compliance and risk management.
- Projects or firms that offer privacy, mixing, or obfuscation of flows may face legal risk, especially if they touch funds tied to sanctioned entities.
- On the flip side, there may be opportunities in building services that help with legal compliance, tracing illicit flows, or auditing transactions.
- Awareness of jurisdiction matters: working in or through jurisdictions with weak AML/CTF enforcement may expose participants to reputational and regulatory risk.
In short, the crypto-regulatory world is tightening. The game is becoming one of not just innovation and yield, but of compliance, transparency, and navigating international law. For those exploring “the next crypto” or aiming to build new revenue streams: understanding this environment is no longer optional.
