US Treasury Sanctions Shadow Crypto Network Processing $94 Billion for Iran

The Lede

For the first time in history, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned entire cryptocurrency exchanges for acting as financial conduits for the Iranian regime. On January 30, OFAC designated Zedcex Exchange and Zedxion Exchange, both UK-registered entities, for allegedly facilitating billions in transactions for Iran’s Islamic Revolutionary Guard Corps (IRGC). The move signals a critical pivot in U.S. enforcement strategy: shifting from blacklisting individual wallets to dismantling the corporate infrastructure itself.

The Scale: $94 Billion in Shadow Volume

The numbers disclosed by the Treasury are staggering. Officials allege Zedcex has processed over $94 billion in transactions since its 2022 inception. While the exchange projected the veneer of a legitimate UK business, blockchain intelligence firm TRM Labs identified a much darker reality: approximately $1 billion of on-chain volume was directly linked to the IRGC. In 2024 alone, illicit flows accounted for roughly 87% of the platform’s traceable activity.

The primary rail for this evasion was USDT on the Tron network. The investigation revealed that Zedcex functioned less as a retail exchange and more as a stablecoin clearinghouse, routing funds between IRGC-controlled addresses and domestic Iranian platforms like Nobitex. This specific vector, USDT on Tron, remains the preferred high-speed, low-fee corridor for sanctions evasion.

The “Death Row” CEO

At the center of this network is Babak Morteza Zanjani, an Iranian tycoon with a biography that reads like a thriller. Sentenced to death in 2016 for embezzling oil revenues, Zanjani’s sentence was commuted in 2024. The Treasury asserts he was released specifically to “launder money for the regime.” His reappearance at the helm of a $94 billion crypto operation underscores the state-sponsored nature of this evasion infrastructure.

Market Reaction: TRX Shrugs

Despite the explicit targeting of Tron-based infrastructure (OFAC froze seven specific TRX addresses), the market reaction was muted. Tron (TRX) held firm at $0.29 (+1.3%), with traders seemingly pricing in the regulatory risk as isolated to the bad actors rather than the protocol itself. The proprietary token of the sanctioned entity, Zedxion (ZEDXION), trades in low-liquidity wash loops around $0.40, largely irrelevant to the broader market.

“This is not episodic abuse of crypto rails; it is infrastructure-level control… Crypto is being used not as a workaround, but as a parallel financial system.” TRM Labs Report.

Institutional Context

This action kills the “whack-a-mole” era of sanctions enforcement. By targeting the exchange entity, the Treasury effectively toxifies any wallet, bank account, or counterparty that ever touched Zedcex. Compliance teams at major custodians (Coinbase, Fireblocks) will now have to retroactively screen for exposure to these entities, potentially freezing millions in secondary assets that flowed through this shadow network.