Binance Files Defamation Lawsuit After Report Alleged $1.7B Iran-Linked Crypto Flows and Internal Probe Shutdown

Exchange challenges investigation over sanctions allegations while citing compliance reforms and declining exposure metrics

TL;DR

• Binance initiated legal action over a report alleging $1.7 billion in crypto flows tied to Iranian networks and the shutdown of an internal investigation.
• The company called the claims “false and misleading” and demanded corrections while highlighting compliance reforms and staffing.
• Data cited by the company showed sanctions exposure falling from 0.284% of volume to 0.009% and Iranian exchange flows dropping from $4.19 million to $110,000.

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Binance has launched a defamation lawsuit against a major U.S. financial publication after a report alleged the exchange facilitated large cryptocurrency transfers tied to Iranian networks and halted an internal investigation into potential sanctions violations. The legal dispute escalated in late February 2026 after lawyers representing the company demanded corrections and a retraction, arguing the story mischaracterized the platform’s compliance program and internal procedures. Executives at the exchange said the report contained “false and misleading statements,” asserting the claims could damage the firm’s reputation and misrepresent how its monitoring systems detect suspicious transactions.

Reporting that triggered the dispute described an internal investigation that allegedly identified more than $1 billion in cryptocurrency transfers connected to networks associated with Iran-backed militant groups. Investigators reportedly examined transactions moving through the platform between 2024 and 2025 and traced activity involving accounts connected to Iranian networks. Documents cited in the reporting said compliance staff flagged the activity as part of internal monitoring efforts designed to detect sanctions violations and suspicious financial flows moving through the exchange’s infrastructure.

Accounts linked to Iranian users were reportedly identified through monitoring systems that flagged more than 1,500 accounts accessed from Iran operating on the platform. According to the report, some of those accounts used intermediary companies and payment channels to move funds through the exchange despite sanctions restrictions. Investigators also traced roughly $1.7 billion in cryptocurrency transactions moving through accounts connected to networks associated with Iran during the period under review.

Investigative findings cited in the report claimed two accounts transferred approximately $1.7 billion in cryptocurrency to groups linked to Iran, including organizations associated with the Houthi militant movement in Yemen. A large share of those transactions reportedly involved more than $1 billion in Tether moving through a Hong Kong-based payments firm known as Blessed Trust. The company allegedly acted as an intermediary converting traditional currency into digital assets before routing funds through exchange accounts tied to Iranian financial networks.

Internal investigators described a structure referred to as the “Chinese Nexus,” which they believed facilitated cryptocurrency flows from Chinese clients to wallets connected with Iranian networks associated with the Islamic Revolutionary Guard Corps. The IRGC is designated by the United States as a terrorist organization under sanctions law. Investigators reviewing the transactions reportedly identified a Blessed Trust account categorized internally as an “internal account,” requiring special authorization from the exchange’s Internal Audit department.

Compliance monitoring systems reportedly generated 14 separate internal alerts tied to the Blessed Trust account during 2025, though automated checks later closed many of those alerts after they failed to meet escalation thresholds. Authorities in the United States were also examining activity tied to the account. Reporting cited inquiries from the FBI and the Internal Revenue Service, with the IRS indicating its inquiry related to suspected money-laundering activity involving transactions processed through the platform.

Investigators concluded the Blessed Trust account transferred more than $1 billion in Tether to an IRGC-linked financial network between November 2024 and August 2025, either directly or through intermediary accounts. Documents reviewed during the investigation also suggested Blessed Trust maintained close commercial ties with the exchange, with internal communications indicating the platform and affiliated entities were among the intermediary’s largest clients by revenue.

The report described links between Blessed Trust and Jukai He, a founding member of the exchange known internally as “Rock,” who oversaw fiat-to-crypto conversion operations. Screenshots of internal chats reportedly identified a representative from the intermediary company described as “Karry…friend of Rock.” Those messages suggested a close working relationship between individuals connected to the payments firm and figures involved in the exchange’s operational infrastructure.

Internal tensions escalated after compliance staff presented their findings to senior executives. Investigators involved in the probe said several members of the team were suspended or dismissed. At least four investigators were reportedly removed from their positions, with the company stating the disciplinary actions were taken because of internal policy violations related to handling confidential user data.

The exchange denied retaliating against investigators who raised sanctions concerns. A company statement said, “no investigator was dismissed for raising compliance concerns or for reporting potential sanctions issues.” Executives also rejected the allegations surrounding Iranian transaction flows. Chief executive Richard Teng publicly criticized the reporting and said the article contained “false” and “defamatory” claims about the company’s compliance systems.

Lawyers representing the exchange sent a legal notice demanding immediate corrections and a full retraction of the article. The letter argued, “Your Article is false, seriously misleading to your readers, and defamatory of our client,” while warning that failure to correct the record could trigger further legal action. The company also requested the publication remove the article entirely until corrections were made.

Background to the dispute includes regulatory enforcement actions against the exchange in 2023, when U.S. authorities reached a settlement over anti-money-laundering and sanctions violations. The agreement required the company to pay $4.3 billion in penalties and forfeitures while implementing significant compliance reforms. The settlement also placed the exchange under government monitoring until 2029 as part of the enforcement framework.

Former chief executive Changpeng Zhao pleaded guilty in connection with the settlement, paid a $50 million personal fine, and stepped down from his leadership role before serving a four-month prison sentence. Zhao later received a presidential pardon from Donald Trump in October 2025. Reporting on the Iran-related investigation stated internal tensions around the probe surfaced weeks after the pardon.

The exchange has maintained that its monitoring systems detected and removed suspicious accounts through standard compliance processes. Company representatives said accounts identified during internal reviews were eventually offboarded from the platform following investigations. Executives also stated that cryptocurrency transactions can be sent to exchange deposit addresses without prior approval, meaning monitoring systems analyze flows after transactions appear on the blockchain.

Company data cited by executives showed sanctions exposure declining sharply during the period examined in the report. Exposure to sanctioned jurisdictions fell by 96.8% between January 2024 and July 2025, dropping from 0.284% of total exchange volume to 0.009%. Flows tied to four major Iranian crypto exchanges also declined significantly, falling from $4.19 million in January 2024 to about $110,000 by January 2026.

Binance also outlined the scale of its compliance infrastructure. The exchange said 593 employees work directly within its Compliance unit while 978 additional staff and contractors support related monitoring functions across the company. Executives stated that more than 1,500 personnel are engaged in compliance operations globally, accounting for roughly 25% of the firm’s workforce.

This article has been refined and enhanced by ChatGPT.