Report Claims Two UK Crypto Exchanges Used to Support Iran’s Islamic Revolutionary Guard Corps (IRGC)

Why It Matters

The alleged use of UK crypto platforms to fund a designated terrorist organization exposes gaps in AML/CFT oversight, prompting regulators to reconsider licensing and beneficial‑ownership transparency for digital asset services.

Key Takeaways

• Zedcex and Zedxion processed ~$1 billion total
• Majority of flows used USDT on TRON blockchain
• IRGC-linked transactions peaked at $619 million in 2024
• UK exchanges allegedly used Turkish processors to evade sanctions
• TRM calls for tighter licensing and ownership transparency

Pulse Analysis

The intersection of cryptocurrency and sanctions enforcement has become a flashpoint as state‑backed actors seek agile financial channels. The IRGC’s alleged reliance on USDT transfers via the TRON network illustrates how stablecoins can bypass traditional banking scrutiny, leveraging the speed and pseudonymity of blockchain. Analysts note that the $1 billion volume processed by Zedcex and Zedxion underscores a broader trend: illicit actors gravitating toward platforms with lax regulatory oversight and cross‑border payment partners.

UK regulators face a dilemma. While the Financial Conduct Authority has introduced crypto‑asset registration, the TRM report suggests that Zedcex and Zedxion operated under a veneer of legitimacy, obscuring beneficial ownership and exploiting Turkish payment processors to sidestep sanctions. This loophole highlights the challenges of applying legacy AML frameworks to decentralized finance, where on‑chain analytics become essential for tracing illicit flows. The involvement of sanctioned billionaire Babak Zanjani further complicates enforcement, as his network spans multiple jurisdictions.

The revelations are likely to accelerate policy shifts. Authorities may move toward transaction‑level monitoring, mandatory disclosure of ultimate beneficial owners, and tighter licensing criteria for crypto exchanges handling stablecoins. For compliance officers, the takeaway is clear: traditional risk models must evolve to incorporate blockchain forensics and real‑time sanctions screening. As governments tighten the net around illicit crypto infrastructure, firms that adopt robust on‑chain monitoring and transparent governance will gain a competitive edge while mitigating exposure to enforcement actions.