Inside Iran’s $1bn Crypto Sanctions Pipeline—and the UK Loophole It Exploits
Iran sanctions evasion is evolving: a report says the IRGC moved $1bn via UK-incorporated crypto exchanges. Here’s how enforcement and “sanctions plumbing” work.
Iran sanctions evasion: IRGC “crypto infrastructure” and the UK enforcement problem
As of January 9, 2026, a new analysis says Iran’s Islamic Revolutionary Guard Corps has moved roughly $1 billion since 2023 through two cryptocurrency exchanges incorporated in the United Kingdom.
The headline is not just the number. It is the method. The report describes something more durable than one-off laundering: repeatable “infrastructure” that behaves like plumbing. Money goes in, stablecoins move, and value comes out somewhere else.
That creates an uncomfortable UK question. When a business is UK-registered but functionally offshore, what can British enforcement realistically stop, and where are the actual choke points?
The story turns on whether sanctions can still work when the rail is open, cheap, and persistent, and the gatekeepers sit outside the banking system.
Key Points
A new analysis says two UK-incorporated crypto exchanges processed about $1 billion in flows linked to the IRGC since 2023, with the bulk of activity concentrated in 2024 and 2025.
The reported mechanism relies on stablecoins, not volatile tokens, and behaves more like settlement infrastructure than speculative trading.
UK “registration” is not the same thing as UK “regulation,” which matters for what the FCA can supervise and what the UK can compel.
Sanctions enforcement is strongest at the conversion points: fiat on-ramps/off-ramps, stablecoin issuer controls, custodial services, and payment processors.
Regulators cannot “turn off” a public blockchain, but they can raise the cost of using it by shrinking the places where crypto can be turned into spendable money.
The strategic shift is from catching transactions to degrading infrastructure: identifying repeatable nodes and removing their access to liquidity, compliance cover, and real-world settlement.
Background
The IRGC sits at the core of Iran’s security state and is under extensive Western sanctions. Those restrictions make normal cross-border banking slow, fragile, and risky for anyone tied to the system.
For years, sanctions evasion often looked like logistics and tradecraft: front companies, brokers, layered payments, and settlement through third countries. Crypto was often treated as an add-on: a tool for smaller transfers, opportunistic laundering, or niche fundraising.
The new analysis describes a more systematic model. Two exchanges, incorporated in the UK, are presented as the kind of ordinary crypto venues that exist by the thousands. But their flow patterns look dominated by a single sanctioned ecosystem. The report frames them as connected brands and corporate shells that function as one operational exchange.
The dominant asset is a dollar-pegged stablecoin. The dominant logic is simple: stablecoins move like cash, but travel like data.
Analysis
Political and Geopolitical Dimensions
The politics of this are awkward because it collapses boundaries. Sanctions are supposed to draw a bright line: designated actors get locked out of the financial system. Crypto blurs that line by offering a parallel settlement layer that does not require correspondent banking.
The UK dimension matters for two reasons. First, incorporation can create perceived legitimacy. A UK company number and a London mailing address can look like “rule of law” branding even if the operation’s real footprint is elsewhere. Second, it drags British institutions into the narrative, whether or not they had any direct involvement.
There is also a signaling element. If sanctioned state-linked actors can operate repeatable rails, the message to others is that sanctions can be routed around with the right infrastructure. That weakens deterrence even when enforcement still bites in other areas.
Economic and Market Impact
This is not just geopolitics. It is also a markets story about what stablecoins have become.
Stablecoins are now used as a working settlement instrument in parts of the world where banks are expensive, slow, or politically constrained. That is the legitimate use case. But the same design features—speed, low fees, and global accessibility—also make them attractive to sanctioned networks.
The report’s emphasis on stablecoins highlights a deeper reality: sanctions enforcement increasingly becomes a fight over liquidity. If a sanctioned network can hold and transfer dollar-like value without touching dollars in a bank, the old pressure points weaken.
The counter-argument from the industry is that transparency helps. Blockchains create permanent records, and analytics firms can map patterns. That is often true. But traceability only turns into enforcement when someone has jurisdictional leverage at the points where value touches institutions.
Technological and Security Implications
Public blockchains are open rails. Regulators cannot revoke access in the way they can revoke a bank’s license. They can only pressure the institutions that make those rails useful.
That is the sanctions plumbing problem. The most realistic choke points tend to sit in four places:
First, custodial control. When assets are held by a service that controls private keys, freezing can be operationally enforced. When assets are self-custodied, freezing becomes indirect and depends on later conversion.
Second, stablecoin controls. Some stablecoin issuers can freeze or blocklist tokens at specific addresses. That does not stop all stablecoin use, and it does not stop the blockchain, but it can poison specific nodes and reduce their utility.
Third, fiat conversion. On-ramps and off-ramps—banks, card rails, payment processors, and regulated exchanges—are where sanctions bite hardest. If you can’t cash out safely, you can’t pay suppliers at scale.
Fourth, infrastructure services. Exchanges need hosting, domains, app distribution, payment partners, and sometimes outsourced back-end systems. None of those are as central as banking, but they are leverage points that can be disrupted faster than a cross-border criminal case.
The security implication is that “infrastructure” is a targetable pattern. If the same entities and wallet clusters keep showing up, enforcement can shift from whack-a-mole to degradation: isolate the cluster, choke liquidity, and raise friction until the rail is no longer reliable.
How enforcement actually works in the UK
In the UK, financial sanctions are implemented by HM Treasury’s Office of Financial Sanctions Implementation. The core mechanism is the asset freeze. If a person or entity is designated, funds and economic resources “owned, held, or controlled” by them must be frozen, and certain dealings are prohibited.
Jurisdiction matters. UK financial sanctions apply to people within UK territory and to “UK persons” even when they operate abroad. That gives a wide theoretical reach. The harder question is practical reach when key activity is routed through foreign services or opaque corporate shells.
The FCA sits in a different lane. UK crypto firms may be required to register for anti-money laundering supervision under the money laundering regulations if they conduct in-scope activity in the UK. But registration is not the same as being fully authorised like a bank, and “UK-incorporated” is not the same thing as “UK-registered with the FCA.” That distinction is where many enforcement expectations fail.
In practice, the UK can move faster on compliance levers than on prosecutions. Monetary penalties, public naming, and supervisory pressure can change behaviour quickly. Criminal cases can take years and face evidential hurdles, especially when beneficial ownership and operational control are abroad.
What Most Coverage Misses
Most coverage treats this as a crypto story. It is better understood as a payments and corporate governance story.
The pivotal detail is the difference between “a UK company exists” and “a UK company is meaningfully inside the UK regulatory perimeter.” Incorporation is cheap. It can be used to manufacture legitimacy, to access counterparties, and to scatter accountability across shells. If enforcement focuses only on the blockchain flows, it can miss the corporate layer that made the flows scalable in the first place.
The second miss is that sanctions rarely fail because regulators do nothing. They fail when the target finds a dependable bridge back into the real economy. The bridge is the point. If the bridge is stablecoin settlement plus payment processor integration plus lightly verified corporate presence, then enforcement needs to focus on the bridge, not the rail.
Why This Matters
For governments, the immediate concern is national security. If sanctioned networks can move large-scale value reliably, it can support procurement, logistics, and proxy activity even under pressure.
For the UK, the stakes are also reputational. London is a global financial centre. Even when the banking system is not directly involved, UK incorporation can be used as a credibility layer. That creates pressure for tougher company transparency, tighter crypto perimeter rules, and more aggressive disruption of high-risk intermediaries.
For the crypto sector, this is about the durability of “compliance by design.” If the largest stablecoins and the most liquid networks keep showing up in sanctions evasion patterns, political tolerance for the status quo shrinks.
Watch for three signposts next: any UK enforcement action or public designation linked to the entities; signs of stablecoin freezing activity linked to the wallet clusters; and changes in how quickly exchanges and payment processors sever relationships when credible risk indicators emerge.
Real-World Impact
A compliance lead at a UK fintech sees the story and immediately reviews counterparties. Not because their firm touched the wallets, but because “UK-incorporated” entities can appear in vendor lists and partner introductions.
A small exporter in Turkey gets paid in stablecoins by a new customer offering better margins than bank wires. The payment clears fast. The bank questions come later, when they try to convert to fiat and their account gets flagged.
A diaspora family tries to send money to relatives in a sanctioned environment. They are pushed toward informal channels because banks are slow and sometimes refuse transfers outright. The same rails that help them can also be exploited by sanctioned actors.
An exchange outside the UK tightens geofencing and wallet screening, not out of moral awakening, but because it fears losing access to global banking partners if it is linked to sanctioned flows.
The Road Ahead
This story is not about whether crypto can be used for sanctions evasion. That is settled. The question is whether the West can still impose meaningful costs when evasion becomes infrastructural.
If enforcement stays transaction-led, the system adapts faster than the response. If enforcement becomes infrastructure-led, the target becomes reliability. Break the bridges. Reduce liquidity. Force constant migration. Make the rail unreliable for large-scale settlement.
The next phase will be defined by who can act fastest at the choke points that matter: stablecoin controls, fiat conversion, payment intermediaries, and the corporate shells that give illicit networks a legitimate-looking face.
