$1 billion money laundering! Iranian Revolutionary Guard uses UK cryptocurrency exchanges to evade sanctions

TRM Labs reveals that the Iranian Revolutionary Guard Corps (IRGC) has been using UK-registered Zedcex and Zedxion since 2023 to transfer approximately $1 billion to evade sanctions, accounting for 56% of the total transactions on both platforms, primarily conducted in USDT on the Tron network. Funds surged from $24 million in 2023 to $619 million in 2024, indicating Iran is building dedicated shadow financial infrastructure.

Stunning Growth from 24 Million to 600 Million Dollars

According to The Washington Post, TRM Labs’ latest analysis uncovers a remarkable growth pattern. Cryptocurrency activities related to the IRGC have exploded over just two years: only $24 million in 2023, skyrocketing to $619 million in 2024—an increase of over 25 times—and reaching $410 million so far in 2025. This growth far exceeds normal business activity, demonstrating organized, planned sanctions evasion efforts.

“Reaching $1 billion in two years shows that digital currencies are becoming the financial channels of Iran’s shadow banking system,” former U.S. Treasury official Myaad Maleki told The Washington Post. This comment highlights a key point: Iran is no longer using cryptocurrencies for occasional small transactions but has integrated them as core financial infrastructure for sanctions evasion.

TRM Labs found that Zedcex and Zedxion are essentially the same company, just under different brand names. From 2023 to 2025, transactions related to the IRGC accounted for 56% of the total trading volume on these two exchanges. This high proportion suggests that their main business is serving the IRGC. Notably, most transactions are conducted using USDT stablecoins on the Tron network.

Choosing Tron and USDT is no coincidence. Tron’s transaction fees are extremely low (usually under $1), and confirmation times are fast, suitable for quick large transfers. USDT, pegged to the US dollar, avoids the price volatility of Bitcoin or Ethereum, making fund transfers more predictable. Additionally, Tron’s relatively lax regulatory oversight makes it a preferred tool for sanctions evasion.

Blockchain Tracking Reveals Fund Networks

To trace these exchanges’ operations, TRM Labs employed innovative investigative methods. Investigators conducted small deposits and withdrawals to uncover internal wallet infrastructure. This approach is akin to detective work: by actively participating in transactions, researchers can identify wallet address patterns, fund flows, and intermediary entities.

Key Fund Flows Discovered

187 IRGC wallet addresses: identified and publicly disclosed by Israeli authorities last year

$10 million Houthi funds: paid from IRGC wallets to addresses controlled by Yemeni citizens

Offshore intermediary networks: transferring funds between IRGC wallets and Iranian crypto companies

Related to Babak Zanjani: businessman who helped Iran evade oil sanctions, involved in these transactions

One of the most notable cases is a $10 million transfer from an IRGC wallet to an address controlled by a Yemeni citizen. This Yemeni individual was sanctioned by the U.S. Treasury in 2021 for smuggling Iranian fuel to fund Houthi militants. This transaction directly demonstrates how cryptocurrencies are used to finance entities designated as terrorist organizations by the U.S.

TRM Labs also linked these transactions to Iranian businessman Babak Zanjani. Zanjani previously helped Iran evade oil sanctions during President Mahmoud Ahmadinejad’s administration and was sentenced to death for embezzlement, though the sentence was commuted, and he was recently released. Zanjani’s re-emergence indicates Iran is mobilizing experienced sanctions evasion experts to build new crypto financial networks.

Arms Trade and Terrorist Financing Networks

The IRGC faces comprehensive sanctions from the U.S. and Western countries, partly due to concerns over Iran’s nuclear program. Additionally, the IRGC provides funding to Hamas, Houthi militants, and Hezbollah—all designated terrorist organizations by the U.S. These sanctions have made it nearly impossible for Iran to conduct international transactions through traditional banking systems, prompting a shift to cryptocurrencies.

More worryingly, The Financial Times recently reported that Iran is considering accepting cryptocurrency payments for its ballistic missiles, warships, and other advanced weapons sales. This suggests cryptocurrencies are not only used for fund transfers but may also directly facilitate arms transactions. If this trend continues, it could pose serious challenges to international security and sanctions regimes.

From a technical perspective, the cross-border nature of cryptocurrencies makes them ideal tools for sanctions evasion. Traditional financial systems rely on SWIFT and other international clearing networks, which are heavily regulated and difficult for sanctioned countries to access. Cryptocurrencies, however, do not require centralized clearinghouses; anyone with an internet connection and a crypto wallet can conduct cross-border transfers. This decentralized feature was an advantage but also creates vulnerabilities for sanctions enforcement.

UK Regulatory Gray Area

Both exchanges claim on their websites to comply with anti-money laundering regulations. Zedcex even lists Iran among jurisdictions where trading is prohibited, but actual operations appear inconsistent with this claim. Zedxion does not list Iran as a prohibited jurisdiction. Neither exchange responded to requests for comment from The Washington Post. The Iranian UN delegation and the UK Financial Sanctions Implementation Office also declined to comment.

This exposes a serious regulatory loophole: UK-registered crypto exchanges can claim compliance with AML laws but lack effective oversight. While the UK’s Financial Conduct Authority (FCA) requires registration for crypto exchanges, ongoing supervision and enforcement seem insufficient. These two exchanges managed to process $1 billion in suspicious transactions over two years without detection or intervention, revealing significant gaps in regulation.

More broadly, this case highlights the challenges of global cryptocurrency regulation. The cross-border nature of cryptocurrencies makes single-country oversight ineffective; international coordination is needed. However, differing regulatory stances among countries create opportunities for evasion by sanctions violators.