The Justice Department is investigating Iran’s use of Binance to evade U.S. sanctions.
The probe follows the crypto exchange’s dismantling of an internal investigation into more than $1 billion that flowed through the platform to a network funding Iran-backed terror groups, according to company documents and people familiar with the matter.
Officials have contacted people with knowledge of the Iranian transactions to seek interviews and gather evidence, some of the people said. The Wall Street Journal couldn’t determine whether the Justice Department is investigating Binance itself for potential misconduct, or solely the customers on its platform.
The inquiry puts the world’s largest crypto exchange back in the legal spotlight after its founder Changpeng Zhao, known as CZ, received a pardon from President Trump in October.
Binance pleaded guilty in 2023 to violating U.S. anti-money-laundering and sanctions laws, paying a $4.3 billion fine and agreeing to operate under U.S. oversight. Zhao pleaded guilty to a related charge and spent four months in jail.
The Treasury Department-appointed monitor overseeing the company’s compliance program also recently requested that the exchange provide information about the Iranian transactions, including about a business partner that sent much of the money, according to people familiar with the requests.
Binance suspended the employees investigating the transactions last November, not long after they flagged $1.7 billion moving from Chinese clients into digital wallets used by Iran to finance its proxies, including Yemen’s Houthi militants, the Journal reported last month, citing internal reports submitted by the employees. Of that total, more than $1 billion was sent by the business partner, a Hong Kong-based payments company called Blessed Trust.
Binance’s 2023 agreement with U.S. authorities requires it to screen clients for potential terrorism financing and sanctions evasion and to report suspicious transactions to the Treasury Department. The company last year asked department officials to remove its monitor, which is scheduled to continue until 2029, and has blocked many of the monitor’s earlier requests, the Journal has previously reported. Binance has said it was confident it complies with all reporting obligations, and it cooperates with law enforcement and regulators.
A Binance spokesman said the exchange “categorically did not directly transact with any sanctioned entities.” He said the company “uncovered a sophisticated, multi-jurisdictional pattern of financial activity,” and the Iranian connections were “only identified and sanctioned after Binance began investigating and taking action in lock step with law enforcement to shut down this network.”
Binance said it didn’t terminate any investigators for escalating compliance concerns and that they left on individual circumstances. The company said the internal investigation continued and led to the Blessed Trust account being shut down earlier this year. Binance said the probe didn’t establish that any of its users transacted directly with a sanctioned entity, instead transmitting funds over several steps.
The exchange said its subsequent investigations had found that only $24 million entered wallets associated with the Islamic Revolutionary Guard Corps, the elite branch of Iran’s armed forces that controls vast parts of the Iranian economy.
The Justice Department declined to comment. Treasury didn’t respond to a request for comment. Iranian authorities also didn’t respond to a request for comment.
Ahead of its joint air campaign with Israel against Iran, the U.S. ramped up efforts to cut off the IRGC’s financing networks, where cryptocurrency has become a vital avenue for repatriating revenues from oil sales to China.
The Treasury sanctioned two small crypto exchanges in January for transferring large sums to digital wallets linked to the IRGC.
Besides the Justice Department and the Treasury monitor, Sen. Richard Blumenthal (D., Conn.), who serves on the Senate Homeland Security committee, also opened an inquiry last month into Binance’s handling of Iranian transactions.
“The scale of the newly-revealed illicit transfers—uncaught until nearly two billion dollars flowed to sanctioned entities—and the unexplained firing of internal investigators call into question Binance’s compliance with American sanctions and banking laws,” said Blumenthal, who cited articles by the Journal and other news outlets.
Blumenthal requested records from Binance, which issued a public response that said the media articles were false and cited its “best-in-class compliance program.” Blumenthal said Binance’s response was “evasive” and did “little to ease my concerns.”
Write to Angus Berwick at angus.berwick@wsj.com and Patricia Kowsmann at patricia.kowsmann@wsj.com