US Treasury Blacklists Crypto Exchanges in Historic Iran Sanctions Expansion
OFAC sanctions Zedcex and Zedxion in a first-ever designation of entire crypto exchanges for Iran-related illicit finance, targeting a $1 billion USDT pipeline.
In a historic escalation of crypto enforcement, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) has designated two digital asset exchanges as illicit financial conduits for the Iranian regime. This marks the first time OFAC has sanctioned entire exchange entities specifically for operating within Iran’s financial sector, signaling a shift from targeting individual wallet addresses to dismantling the infrastructure itself.
The two targets, Zedcex Exchange Ltd. and Zedxion Exchange Ltd., are UK-registered entities that allegedly served as front companies for the Islamic Revolutionary Guard Corps (IRGC). While the platforms presented themselves as legitimate businesses, data reveals they processed over $94 billion in transactions since 2022.
The “Death Row” Laundromat
The operation centered on Babak Morteza Zanjani, a notorious financier previously sentenced to death in Iran for embezzling oil revenues. According to the Treasury, Zanjani was released from prison specifically to facilitate money laundering for the state. He leveraged the Zedcex/Zedxion network to fund IRGC-Qods Force projects and even bankroll Houthi operations in Yemen.
The $1 Billion Tether Pipeline
The scale of the evasion was industrial. TRM Labs analysis identified approximately $1 billion in illicit flows directly linked to the IRGC through these exchanges. The technical vector was specific: the vast majority of these transfers were conducted in USDT on the TRON network.
The exchanges’ addresses have moved funds connected to Iranian government entities… [this action] targets illicit liquidity and cryptocurrency markets.
Market reaction for the exchanges’ native token, ZEDX, was muted due to negligible liquidity, effectively rendering it a zombie asset. However, the designation serves as a warning shot to other “grey market” exchanges: corporate registration in a Western jurisdiction (like the UK) no longer provides cover for sanctions evasion.
