US Treasury Sanctions Iranian Exchange BitBank Over Bitcoin Payments

The US Treasury sanctioned Iranian crypto exchange BitBank for moving hundreds of millions of dollars in Bitcoin to Iran's Revolutionary Guard. According to the agency, the platform processed payments under a scheme Iran calls "Hormuz Safe". In essence, it was a fee for safe passage of ships through the Strait of Hormuz. The designation took effect immediately.

What the US Treasury Decided

The Office of Foreign Assets Control (OFAC), a Treasury Department division, formally added BitBank to its SDN sanctions list on Thursday. That list covers people and companies with whom any dealings automatically become illegal for US citizens and companies. The exchange is registered in Iran and, according to investigators, spent years serving clients looking for ways around restrictions on dealing with the country.

Under the designation, US companies and citizens are barred from any transactions with BitBank, including crypto exchanges or fund transfers through intermediaries. Any BitBank assets within US jurisdiction are subject to seizure. Foreign banks and centralized crypto exchanges that keep working with the platform risk secondary sanctions themselves and could lose access to the dollar financial system. The BitBank designation is part of a broader Treasury campaign against channels Iran uses to bypass oil export restrictions. In practice, the designation cuts BitBank off from the dollar system entirely: no correspondent bank will process a payment tied to it, and international payment networks will block its accounts. The Revolutionary Guard has been designated a foreign terrorist organization by the US since 2019, so any funding reaching it falls under the strictest sanctions regime available.

How the "Hormuz Safe" Scheme Worked

The Strait of Hormuz links the Persian Gulf to the Gulf of Oman and carries roughly a fifth of the world's daily seaborne oil exports. Iran has repeatedly threatened to close the strait or detain tankers over alleged shipping violations, and some vessels have sat idle for weeks as a result. Past incidents of this kind have already triggered brief spikes in global oil prices.

Shipowners whose tankers pass through the strait allegedly sent Bitcoin to BitBank addresses in exchange for guarantees of unhindered passage. On paper it was billed as insurance or a consulting fee, but in practice it worked as tribute. Payments were typically made just before entering the strait or right after leaving it, with the amount tied to a vessel's tonnage and cargo value. Without that "insurance," vessels risked being stopped or boarded by Iranian military patrol boats, which for a large tanker means downtime worth hundreds of thousands of dollars a day. OFAC treats the payments not as a commercial service but as a form of tribute funding the country's military structures.

Where BitBank's Funds Ended Up

According to the Treasury, BitBank did not just collect payments. It systematically converted them into cash and other assets before the proceeds reached the Revolutionary Guard. Investigators traced the flow of funds using blockchain analytics, which can follow transactions even through several intermediary wallets. The agency outlined several elements of the network:

• The exchange operated without any licenses recognized by regulators outside Iran.
• Funds passed through a chain of intermediary wallets before reaching Iranian accounts.
• Some transactions were disguised as ordinary transfers between individuals or small-scale trading.
• Final recipients were entities tied to Iran's military command and logistics.

Officials said the network helped bypass years of accumulated restrictions on Iranian oil exports and the related dollar settlements. They noted that the transparency of the blockchain itself ultimately helped expose the scheme, despite attempts by those involved to obscure the trail through numerous transfers. Shipowners who sent funds have no way to get them back, since blockchain transfers are permanent, and BitBank itself lost the ability to legally process new transactions through its partners in Europe and Asia once it was designated.

Another Hit on Iran's Crypto Channels

Washington has been pressing Iran's crypto channels for more than one month running. Earlier in September, the US Department of Justice already sought forfeiture of $61 million in USDT tied to a similar oil-sanctions evasion scheme, and other Tehran-linked platforms faced restrictions before that. Both cases show that crypto remains one of the few channels Iran uses for international settlements outside the banking system, despite the public nature of the blockchain.

Financial-crime analysts note that fully stamping out such schemes is difficult, since new exchanges can appear almost instantly while an investigation and a sanctions package take months to build. Still, each exposed channel raises the cost and complicates the logistics of evading restrictions for Tehran. The US Treasury did not say whether further sanctions against other exchanges linked to BitBank are planned, and only noted that it continues tracking wallets tied to the "Hormuz Safe" scheme.