A significant congressional inquiry has been launched into Binance, the world’s largest cryptocurrency exchange, following investigative reports alleging the platform facilitated billions in transactions for sanctioned entities in Iran and Russia’s “shadow fleet” of oil tankers.
The probe is led by Senator Richard Blumenthal, the top Democrat on the Senate Permanent Subcommittee on Investigations. On Tuesday, he formally requested a trove of internal documents from Binance CEO Richard Teng, demanding records on the exchange’s sanctions screening, compliance protocols, and specific user accounts linked to high-risk jurisdictions.
Allegations of Processing Sanctioned Funds
Senator Blumenthal’s letter cites recent reporting by major financial news outlets, including The Wall Street Journal, The New York Times, and Fortune. According to these reports, Binance’s own compliance staff internally identified two partner entities, Hexa Whale and Blessed Trust, acting as intermediaries for trades involving organizations tied to the Iranian government. Furthermore, internal investigations are said to have traced cryptocurrency transfers to wallets associated with Iran’s Islamic Revolutionary Guards Corps (IRGC), a designated foreign terrorist organization.
The senator’s letter also references payments made to crews operating tankers involved in Russia’s schemes to evade international sanctions on oil exports. Blumenthal stated that Binance “appears to have ignored clear warning signs, knowingly allowed illicit accounts to operate, and even provided hands-on support to entities engaged in money laundering.” He has set a March 6 deadline for Binance to produce communications, account records, and internal compliance reports related to users in Iran and participants in Russian sanction-evasion networks.
Specific Claims Under Scrutiny
The core of the allegations centers on the reported $1.7 billion in transaction volume linked to sanctioned Iranian entities and the Russian shadow fleet. This figure, first reported by The Wall Street Journal, has been a focal point of the controversy. The Senate inquiry seeks to determine the veracity of these internal findings and Binance’s subsequent actions.
Binance’s Strong Denial and Defense
Binance has issued a categorical denial of the allegations. A spokesperson told Cointelegraph that the recent media reports are “inaccurate,” asserting that the platform identified and reported suspicious activity as required. The exchange maintains it does not permit users from Iran to access its services.
“Over the last several years, Binance has undergone one of the industry’s strongest compliance transformations, which has allowed us to achieve our current regulatory milestones,” the spokesperson stated, pointing to its enhanced controls.
CEO Richard Teng directly criticized The Wall Street Journal’s report, calling it “defamatory” and demanding a retraction. In a separate blog post, Binance claimed it has drastically reduced its exposure to sanctioned and high-risk jurisdictions, citing a 97% drop in related transaction volume since January 2024, which it says now represents a mere 0.009% of total exchange volume.
Context: A History of Regulatory Scrutiny
This Senate inquiry does not occur in a vacuum. It follows Binance’s massive 2023 settlement with U.S. authorities, where the company admitted to willful violations of anti-money laundering (AML) and sanctions laws. As part of that agreement, Binance paid $4.3 billion in penalties. Founder Changpeng Zhao (CZ) stepped down as CEO and later served a four-month prison sentence for related charges. The settlement also imposed a court-appointed monitor to oversee Binance’s compliance reforms for several years.
Senator Blumenthal explicitly referenced this history in his letter, noting that the newly reported activity “could raise questions about the exchange’s adherence to that agreement.” The subcommittee’s investigation will likely examine whether the patterns described in media reports represent a breach of the stringent compliance commitments Binance made to U.S. regulators.
The outcome of this congressional probe, with its demand for internal Binance records, could significantly influence the ongoing regulatory oversight of the exchange and the broader cryptocurrency industry’s approach to global sanctions compliance.
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