US Treasury’s OFAC Sanctions UK-based Crypto Exchanges Zedcex and Zedxion

• US Treasury’s OFAC sanctions UK-registered exchanges Zedcex and Zedxion and their backers.
• The two exchanges are connected to an Iranian sanctions evader and helped the country to launder around $1 billion.
• Other Iranians who were instrumental to the Iranian regime’s recent crackdown on protesters were also added to the sanctions list.

The US Treasury Office of Foreign Assets Control (OFAC) has announced sanctions of UK-based crypto exchanges Zedcex and Zedxion. The decision follows reports that the exchanges helped Iran launder funds.

This marks the first time that OFAC will designate crypto exchanges on its sanctions list for assisting the Islamic  Revolutionary Guard Corps (IRGC).

Crypto Exchanges Helped Iran Launder $1 Billion

According to OFAC, Iran has been using digital assets to evade sanctions with Zedcex and Zedxion processing funds for wallets linked to the IRGC. A recent report by TRM Labs has revealed that the two exchanges helped the country to move $1 billion through the UK.

OFAC acknowledged this in its report, noting that Zedcex and Zedxion both have connections to Iranian businessman Babak Morteza Zanjani. While Zanjani was once sentenced to death in Iran for embezzlement, he has since become a major investor in the country, backing its railway project.

The US agency claimed that Zanjani was freed from prison so he could help the Iranian government to launder money. This appeared to be the case with the businessman, initially listed as a director of Zedxion when it registered in 2021.

For operating in Iran’s financial sector, Zanjani and the two exchanges were designated as sanctioned pursuant to EO 13902. The exchanges got further designation for assisting the IRGC.

OFAC said:

“Additionally, OFAC is also designating Zedcex Exchange, Ltd. and Zedxion Exchange, Ltd. pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the IRGC.”

Interestingly, the sanctions also touched crypto wallets with seven high-volume addresses associated with the exchanges. This shows that comprehensive efforts are being made to target crypto infrastructure linked to Iran.

Iran Officials Sanctioned for Protest Crackdown

Meanwhile, the OFAC also sanctioned several other individuals for their connections to the IRGC. These include the minister of interior, Eskandar Momeni Kalagari, and key commanders of IRGC, such as Majid Khademi, Ghorban Mohammad Valizadeh, Hossein Zare Kamali, and Hamid Damghani. A commander of the Law Enforcement Forces of Iran (LEF), Mehdi Hajian, also got sanctioned.

The OFAC claims that all these individuals have been instrumental in quelling protests against the Iranian regime. The anti-government protest, which erupted in early January, led authorities to impose an Internet blackout as the National currency collapsed.

According to reports, the crackdown by the Iranian regime resulted in the death of 36,000 people in the country within just two days. The US government had criticized this while threatening intervention.

Treasury Secretary Scott Bessent said:

This is not the only recent sanction on Iran. On January 29, the Council of the European Union also sanctioned 15 individuals and 6 entities for human rights violations and supporting Russia’s invasion of Ukraine.