In a shocking revelation, a report from TRM Labs uncovered that two UK-registered companies have transferred over $1 billion in stablecoins to wallets connected to Iran’s Islamic Revolutionary Guard Corps (IRGC). This finding sheds light on the growing usage of cryptocurrency for sanctions evasion and illicit financial activity.
The Role of Zedcex and Zedxion in Sanctions Evasion
The report focuses on two companies, Zedcex and Zedxion, which branded themselves as cryptocurrency exchanges but operated more as conduits for large-scale transactions. Despite operating under separate names, the two companies shared the same registered address and exhibited nearly identical financial reports, suggesting they functioned as a single entity.
According to TRM Labs, these entities funneled approximately $619.1 million in 2024 alone, with 87% of this amount connected to transactions for the IRGC. These figures were significantly higher than $23.7 million recorded in 2023, reflecting a staggering increase in activity by 2,500%.
Key Figures and Connections
The companies’ activities also brought several individuals into the spotlight. Babak Morteza, a former director of Zedxion, was linked to moving billions of dollars for the Iranian government. His association with Zedcex and Zedxion highlights how these firms are part of a broader sanctions evasion network.
The Growing Risks of Crypto Misuse
Blockchain intelligence experts emphasize the danger of allowing cryptocurrency platforms to operate without rigorous oversight. “This is not opportunistic crypto misuse—it’s a sanctioned military organization operating exchange-branded infrastructure offshore,” noted Ari Redbord, Global Head of Policy at TRM Labs.
The misuse of stablecoins, particularly USDT (Tether), in sanctions evasion is a growing concern. Chainalysis has identified cryptocurrency as an alternative payment system that facilitates cross-border trade in the face of heavy sanctions.
What This Means for the Crypto Industry
As Iran grapples with severe socio-political unrest, including ongoing protests and economic challenges, the government’s alleged reliance on cryptocurrency to bypass restrictions is under increased scrutiny. Financial institutions, blockchain firms, and governments are now focusing on implementing stricter regulations and oversight to prevent similar cases of abuse.
For those in the cryptocurrency industry, maintaining compliance with sanctions and AML (anti-money laundering) regulations is critical. Brands like Chainalysis offer solutions for businesses to monitor and trace suspicious transactions, ensuring they stay ahead of potential legal and ethical risks.
This case highlights the need for global cooperation among regulatory bodies, blockchain intelligence firms, and crypto exchanges to ensure that the financial system remains secure and free from illicit activity.
