Last Updated: 13 July 2022
According to Reuters, Binance served Iranian customers even though the country was on the sanctions list and the crypto exchange was not allowed to do business there. An email address and VPN were sufficient to continue trading.
In 2018, under Trump, sanctions were again introduced against Iran. As a result, crypto companies that did business in the United States were not allowed to also serve customers in Iran. In November of that year, Binance notified users in Iran of the sanctions and instructed them to cancel their accounts and withdraw crypto currency.
Binance served crypto traders in Iran for years in spite of US sanctions, clients say https://t.co/udfA01nNwy
— Middle East Monitor (@MiddleEastMnt) July 12, 2022
Reuters has spoken to seven traders who continued to trade and were able to do so until September 2021. In that period, Binance became stricter in applying anti-money laundering rules, but until then, an email address was enough to start trading.
“There were alternatives, but they were not as good as Binance,” says Asal Alizade, a trader from Tehran who says he had a Binance account until September 2021. “You had no identity verification, so we used it all.”
Binance knew about it
Within Binance, the use by Iranian customers was known. Senior staff joked about the increasing popularity of Binance among Iranians. On the company’s blog, the tone was quite different. In March, a blog post stated that Binance “strictly follows international sanctions rules” and that it had convened a “global compliance task force” “including world-renowned sanctions and enforcement experts.”
According to lawyers, the division into Binance.US and Binance primarily protects the company from US sanctions. But there are also so-called ‘secondary sanctions’ that prevent foreign companies from doing business in the United States. Binance would then, for example, no longer have access to the American financial system.
The trade exchange already does not have a good reputation when it comes to compliance.
One way of circumventing the sanctions is to use VPN to mask the location of the IP address. If all that is needed for customer research is an e-mail address, users from Iran, and North Korea, for example, can simply do business on Binance. The crypto exchange published an article with instructions for using VPNs in 2020.