U.S. Senator Richard Blumenthal, the ranking member of the Senate Permanent Subcommittee on Investigations, has launched a formal probe into Binance, the world’s largest cryptocurrency exchange, over allegations that approximately $1.7 billion in crypto transfers flowed to Iranian entities linked to sanctioned groups and activities.
Internal Binance compliance investigators reportedly uncovered evidence last year of $1.7 billion transferred from two accounts on the platform to Iranian-linked entities. These allegedly include connections to the Islamic Revolutionary Guard Corps (IRGC), Yemen’s Houthi militants (designated as terrorist organizations), and intermediaries facilitating Russia’s sanctions-evading “shadow fleet” oil trade.
The transfers were said to involve Hong Kong-based partners or vendors, such as Hexa Whale and Blessed Trust, acting as intermediaries. Reports claim Binance ignored internal warnings, failed to prevent the activity, and suspended or dismissed some of the compliance staff who flagged the issues.
Senator Blumenthal sent a letter to Binance co-CEO Richard Teng demanding records by March 6, 2026, including details on: Binance’s relationships with the named Hong Kong entities. The handling and dismissal of compliance personnel involved in the investigations. Broader compliance with U.S. sanctions and anti-money laundering (AML) obligations.
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026).
Register for Tekedia AI in Business Masterclass.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab.
This revives scrutiny on Binance, which settled with U.S. authorities in 2023 for $4.3 billion over AML violations including facilitating transactions for sanctioned users and saw its founder Changpeng Zhao serve prison time before a pardon.
The exchange has denied the allegations, stating it maintains strict Know Your Customer (KYC) controls, has no Iranian users, detected and reported suspicious activity, and is conducting an internal review with a report due to the Justice Department.
It has emphasized significant reductions in high-risk transactions since early 2024. The probe highlights ongoing concerns about cryptocurrency’s role in sanctions evasion, especially amid geopolitical tensions involving Iran and Russia. It could lead to further regulatory pressure on Binance and the broader crypto industry in the U.S.
If the probe substantiates claims of ignored warnings, dismissed compliance staff, or failures under the 2023 agreement which included a compliance monitor, it could trigger: Additional fines or penalties from the DOJ, Treasury (OFAC), or SEC. Stricter oversight, operational restrictions in the U.S., or even further criminal probes.
Questions about Binance’s compliance reforms, despite claims of a 97% drop in sanctioned exposure since early 2024. Allegations of firing investigators who flagged issues erode trust, especially amid reports of internal cover-ups or lobbying efforts.
Binance has strongly denied violations, emphasized no Iranian users, strict KYC, suspicious activity reporting, and ending ties with implicated Hong Kong entities. Short-term volatility in crypto markets is possible if sentiment sours on Binance (the largest exchange by volume).
User outflows, reduced liquidity, or partner hesitancy could occur, though the $1.7B figure is small relative to Binance’s overall activity. Reinforces concerns about crypto’s use in evading sanctions via stablecoins like Tether on Tron. This could accelerate calls for tougher global rules, enhanced monitoring, or restrictions on certain chains and tools.
May influence pending U.S. crypto legislation or enforcement priorities, testing post-2023 reforms industry-wide. It highlights risks for exchanges handling high-volume cross-border flows. If confirmed, the transfers could have indirectly supported designated terrorist groups like Houthis or Russia’s war economy, undermining U.S. foreign policy.
This adds to debates on crypto’s role in “unfinished war on terror finance.” Blumenthal’s letter notes Binance’s alleged lobbying and ties to World Liberty Financial linked to Trump family, contrasting with prior enforcement leniency under recent administrations.
outcomes hinge on Binance’s March 6 submission, any DOJ follow-up on its February 25 internal report, and potential subcommittee hearings. Binance continues to push back aggressively, accusing some media of defamation. No immediate market crash or enforcement has materialized, but the probe underscores persistent risks for major exchanges in a geopolitically tense environment.