The U.S. Attorney’s Office for the Southern District of New York announced on Monday, September 14th, that it has filed civil forfeiture lawsuits against two Chinese companies, seeking to seize $61 million worth of cryptocurrency.
According to the announcement posted on the official website of the U.S. Attorney’s Office for the Southern District of New York, the funds of these two Chinese companies originated from the illicit sales of sanctioned Iranian oil and petroleum products on the black market, intended to finance the Iranian government and its military forces, including the Iran’s Islamic Revolutionary Guard Corps (IRGC) designated as a terrorist organization by the United States.
Deputy U.S. Attorney Sean S. Buckley stated that this action demonstrates the United States’ determination to cut off the illegal funding sources relied upon by the Iranian government and its proxies. Iran has been using funds from illicit black market oil sales to support its military forces and terrorist activities in the Middle East and globally, as well as to develop nuclear programs and ballistic missile projects capable of carrying nuclear warheads.
“We are today seizing and seeking the forfeiture of over $61 million of Iranian government funds that would have been used to fuel hostile military actions against the United States and its allies and terrorist attacks,” said Buckley.
The complaint alleges that the Iranian government whitewashed over $1.5 billion of illegal oil sales funds through a network of cryptocurrency traders based in China and other regions, in order to benefit the Iranian military and the IRGC.
The case is being handled by the U.S. Attorney’s Office’s Illegal Finance and Money Laundering Unit, along with the National Security and International Narcotics Unit.
The complaint states that two Chinese companies, Blessed Trust and Hexa Whale, used accounts opened at the crypto exchange Binance based in the United Arab Emirates to transfer Iran’s proceeds from black market oil sales.
Blessed Trust claimed to engage in wealth management or virtual asset custodial services, but in reality, it received and transferred funds from Iran’s oil sales and provided services to exchange fiat currency for cryptocurrency, including operating through a U.S.-based cryptocurrency issuer.
Hexa Whale presented itself as a bulk commodity brokerage firm but also provided similar services to Iran, working in coordination with Blessed Trust and related entities.
Investigations revealed that clients of these two Chinese companies also included enterprises in China’s oil and petroleum industry.
Data indicates that a group of interrelated non-custodial cryptocurrency addresses, referred to as “Entity A,” has received and distributed over approximately $1.5 billion of funds from illegal Iranian oil sales.
These funds were funneled to currency service businesses associated with the IRGC, cryptocurrency addresses, and an Iranian cryptocurrency exchange.
The related transactions were designed to conceal the nature, source, and ownership of the funds.
Furthermore, the two Chinese companies are accused of sending or receiving tens of millions of dollars through the U.S. financial system.
James C. Barnacle, Jr., in charge of the FBI’s New York Field Office, highlighted that this lawsuit demonstrates the FBI’s ability to trace fund flows, dismantle illicit money laundering schemes, and prevent the flow of cryptocurrency attempting to evade sanctions or engage in terrorist activities. By cutting off the funds raised from black market oil sales, the power of the Iranian military and terrorists will be weakened.
The U.S. Attorney’s Office emphasized that the contents of the civil forfeiture complaint are merely allegations and represent funds or property involved in crimes or representing criminal proceeds. These allegations are not considered proven until a court makes a judgment.