US Treasury sanctions BitBank, targets $1 billion Iran-linked crypto flows

The US Treasury imposed sanctions on BitBank, a cryptocurrency exchange the agency identified as owned by Babak Zanjani, who is already under US sanctions. According to Treasury officials, Zanjani used BitBank between June and July to transfer hundreds of millions of dollars in Bitcoin to Iran’s Islamic Revolutionary Guard Corps (IRGC).

OFAC expands focus to crypto infrastructure

The Office of Foreign Assets Control (OFAC) extended the list of sanctioned entities to include Pishtaz Simorgh Electronic Trade Company, BitBank’s developer, along with several associates linked to Zanjani. Treasury Secretary Scott Bessent stressed that these measures serve as a warning to the entire crypto sector that US sanctions extend to digital infrastructure and intermediaries serving illicit actors.

Today’s designations of Iranian digital asset infrastructure make perfectly clear that efforts to finance the Iranian regime using cryptocurrencies are not beyond OFAC’s reach, said Treasury Secretary Scott Bessent.

Bessent cautioned further on X, warning that the Department of the Treasury will enact sanctions against violators.

The Department of the Treasury will sanction you.

Babak Zanjani, already familiar to international sanctions authorities, is described by the Institute for Financial Integrity as a financier previously sentenced to death by Iran and later commuted, who reconstructed a UK-based crypto exchange employing a fictitious executive created from stock photography. This operation reportedly transferred around $1 billion in assets linked to the IRGC before authorities intervened. Treasury officials believe Zanjani subsequently established a wider network of digital-asset companies to facilitate laundering for the IRGC.

Mini dictionary: OFAC (Office of Foreign Assets Control) is a financial intelligence and enforcement agency within the US Treasury responsible for administering and enforcing economic and trade sanctions against targeted foreign countries, individuals, and entities.

Operation Economic Outcast broadens sanctions landscape

The action against BitBank is part of Operation Economic Outcast, launched on August 24. This ongoing effort has already identified nearly 60 entities, individuals, and vessels linked to Iran, with enforcement actions covering the digital assets, technology, gold, aviation, and shipping sectors under Executive Order 13902, as reported by TRM Labs.

Recent determinations concerning digital assets represent a significant policy shift for OFAC. Chainalysis noted that individuals or firms operating in Iran’s digital-asset sector now risk sanctions regardless of ties to terror groups or designated parties. The new framework raises compliance stakes for exchanges, over-the-counter trading desks, and underlying infrastructure providers serving this segment.

Risks for foreign intermediaries and banks

OFAC issued a specific warning to foreign financial institutions, including those outside the US, that engage with sanctioned exchanges such as Wallex, Nobitex, Aban Tether, and Ramzinex. These institutions face the risk of sanctions and could lose access to US correspondent banking if found conducting transactions for parties restricted by US regulations.

Iran’s sanctions-evasion activity often involves elaborate structures, including family member accounts, shell companies, exchange houses, and shadow tanker operations in addition to crypto exchanges. Experts note that relying solely on screening digital wallets leaves significant gaps, as evasion mechanisms increasingly operate outside the view of compliance teams monitoring crypto addresses alone.

Shifting flows and stablecoin dominance

Stricter US enforcement may cause funds to shift channels rather than disappear. Chainalysis reported that IRGC-linked addresses accounted for over half the value received in Iran’s crypto sector in the fourth quarter of 2025, reflecting an annual volume surpassing $3 billion.

A TRM Labs report on cryptocurrency-related crime in 2026 indicated that in 2025, stablecoins facilitated nearly 95% of inflows to sanctioned entities and jurisdictions. During 2024–2025, transaction activity through centralized exchanges involving these parties dropped almost 30%, while flows via decentralized or high-risk, no-KYC services more than doubled.

The Financial Action Task Force (FATF) found in its 2026 update that while 83% of 109 jurisdictions had passed the Travel Rule, only 40% had implemented active enforcement or supervisory actions. Incomplete or inconsistent oversight creates opportunities for sanctioned activity to shift toward low-compliance jurisdictions or less regulated intermediaries, despite ongoing US pressure.