US Seeks Forfeiture of $61 Million in Cryptocurrency Linked to Iranian Oil Sales

The United States Department of Justice has filed a civil forfeiture complaint seeking approximately $61 million in cryptocurrency that prosecutors allege represents proceeds from the black-market sale of sanctioned Iranian crude oil and petroleum products.

The complaint, filed in the Southern District of New York, targets cryptocurrency held across a network of addresses and alleges that the funds were ultimately intended to benefit the Government of Iran and Iranian military-related entities, including the Islamic Revolutionary Guard Corps (IRGC), which is designated by the United States as a terrorist organisation. The government is seeking forfeiture of the cryptocurrency on the basis that it allegedly represents proceeds of sanctions violations, money laundering and other unlawful activity.

According to the allegations, more than $1.5 billion in proceeds from Iranian oil sales passed through a group of interconnected cryptocurrency addresses referred to in the complaint as the “Entity A” addresses. The addresses allegedly received and distributed funds connected with Iranian oil transactions and transferred money to businesses and cryptocurrency addresses associated with the IRGC, as well as to an Iranian cryptocurrency exchange.

Two Hong Kong-incorporated companies, Blessed Trust Limited and Hexa Whale Trading Limited, are identified in the complaint as important intermediaries in the alleged scheme. Prosecutors allege that the companies presented themselves to financial and cryptocurrency service providers as legitimate businesses while actually facilitating the movement of proceeds from Iranian oil sales.

Blessed Trust allegedly represented itself as a wealth management or virtual asset custody business. The complaint alleges that it instead received and transferred proceeds from Iranian crude oil and petroleum product sales and provided services for converting conventional currency into cryptocurrency. Prosecutors allege that some of those conversions involved US-based cryptocurrency issuers.

Hexa Whale allegedly represented itself as a commodities brokerage business. According to the complaint, it performed functions similar to those attributed to Blessed Trust and worked with Blessed Trust and related entities to process and transfer funds associated with Iranian oil transactions. The companies' reported clients included businesses operating in China's petroleum and petroleum-products sector.

Cryptocurrency trading accounts maintained at Binance were allegedly used to facilitate transactions involving the proceeds. The complaint states that individuals and entities, including Blessed Trust and Hexa Whale, used Binance accounts to conduct cryptocurrency transactions involving proceeds from Iranian oil sales to buyers in China. The funds were allegedly subsequently transferred towards the Government of Iran, its agents or its proxies.

The complaint describes Binance as a UAE-based cryptocurrency exchange and identifies particular trading accounts that were allegedly used in the movement of the funds. The filing does not name Binance as a defendant in the civil forfeiture action. The allegations concern the use of accounts on the platform by third parties identified in the complaint.

The alleged transactions involved both traditional financial institutions and cryptocurrency infrastructure. Prosecutors state that Blessed Trust and Hexa Whale used the US financial system to send or receive tens of millions of dollars in connection with the alleged scheme. Cryptocurrency was then used as part of the movement and conversion of funds between participants and jurisdictions.

The complaint alleges that the cryptocurrency addresses associated with Entity A were structured and used to obscure the nature, source and ownership of the funds. The network allegedly moved proceeds between multiple cryptocurrency addresses and counterparties, including businesses and addresses associated with the Iranian military and an Iranian cryptocurrency exchange.

The approximately $61 million targeted in the forfeiture action represents only a portion of the more than $1.5 billion in transactions attributed by prosecutors to the wider network. The larger figure relates to the alleged transaction volume through the Entity A addresses, while the forfeiture proceeding concerns specific cryptocurrency identified by the US government.

The cryptocurrency involved in the forfeiture action is primarily USDT, the stablecoin issued by Tether. Reports concerning the court filing state that approximately $61.19 million in USDT was held across ten Tron blockchain addresses targeted by the government. The addresses had previously been frozen, according to the court filing and related records.

The use of cryptocurrency in the alleged transactions forms part of a broader pattern identified by US authorities in cases involving sanctions evasion and illicit finance. The US Treasury's 2026 National Money Laundering Risk Assessment states that illicit actors have used foreign digital asset service providers to conceal the ownership or location of illicit proceeds and have transferred digital assets between multiple service providers and jurisdictions.

The Treasury assessment also identifies cryptocurrency as one of several mechanisms used to move or obscure illicit funds. It notes that digital assets can be transferred across borders and between service providers, while investigators may use blockchain records and other financial information to trace transactions and identify connections between addresses and entities.

The Iranian oil case involves allegations that cryptocurrency was used after the sale of sanctioned petroleum products to facilitate the movement of proceeds. According to the complaint, the transactions involved buyers in China, intermediaries operating through Hong Kong and cryptocurrency addresses that ultimately transferred funds towards Iranian entities.

The US government alleges that the proceeds were intended to finance activities of the Iranian government and military, including activities associated with the IRGC. The complaint therefore combines allegations concerning sanctions evasion, movement of petroleum proceeds, cryptocurrency transactions and the financing of designated Iranian entities.

The forfeiture proceeding is a civil action against the cryptocurrency itself rather than a criminal prosecution of the owners of the targeted assets. Under US civil forfeiture procedures, the government seeks a court order transferring ownership of property that it alleges is connected to criminal activity or represents proceeds of unlawful conduct.

The filing does not constitute a final judicial determination that the cryptocurrency represents proceeds of crime. The Department of Justice expressly states that a civil forfeiture complaint contains allegations that must be established before a court before forfeiture can be completed.

The case remains before the US courts, with the government seeking forfeiture of the approximately $61 million in cryptocurrency identified in the complaint. The broader allegations concerning the movement of more than $1.5 billion in Iranian oil proceeds remain allegations contained in the government's filing.

By fLEXI tEAM