Iranian-Linked Cryptocurrency Wallets Moved $3.8 Billion Through CoinEx, Says TRM Labs

Since 2019, Iranian-linked cryptocurrency wallets have moved over $3.8 billion through the CoinEx exchange, according to blockchain analytics firm TRM Labs, which cited transaction data from the platform. The findings highlight growing concerns about the use of decentralized finance (DeFi) systems to circumvent sanctions.

TRM Labs’ Findings on Iranian Crypto Activity

TRM Labs, a New York-based blockchain intelligence company, identified over 1,200 cryptocurrency wallets with ties to Iran that facilitated transactions on CoinEx, a Hong Kong-based exchange. The firm’s March 2024 report analyzed on-chain data and linked the wallets to addresses associated with Iranian financial entities, including those sanctioned by the U.S. Treasury. “These transactions represent a significant volume of funds moving through a platform that lacks robust anti-money laundering (AML) protocols,” said a TRM spokesperson, citing internal analysis.

The $3.8 billion figure includes transfers across multiple cryptocurrencies, with Bitcoin (BTC) and Tether (USDT) making up the majority. TRM’s data shows that 62% of the funds were routed through CoinEx’s peer-to-peer (P2P) trading system, which allows users to bypass traditional verification processes. The firm noted that CoinEx’s lack of centralized oversight has made it a target for illicit activity, though the exchange has denied direct involvement.

CoinEx’s Response to Allegations

CoinEx issued a public statement in April 2024, asserting that it “strictly complies with global AML and know-your-customer (KYC) regulations.” The exchange pointed to its 2023 partnership with Chainalysis, a blockchain analytics firm, as evidence of its commitment to transparency. “We take all allegations seriously and are cooperating with relevant authorities to investigate any potential violations,” the statement said.

However, critics argue that CoinEx’s P2P system remains a loophole. “The exchange’s reliance on user-driven transactions creates opportunities for bad actors to exploit regulatory gaps,” said Sarah Lin, a financial crimes analyst at the Global Financial Integrity (GFI) organization. “This isn’t just about Iran—it reflects a broader challenge in policing decentralized platforms.”

Implications for Global Cryptocurrency Regulation

The TRM report adds to mounting pressure on regulators to address the role of crypto exchanges in sanction evasion. The U.S. Treasury’s Office of Foreign Assets Control (OFAC) has previously warned that “decentralized platforms pose unique risks due to their lack of centralized control.” In 2023, the agency fined two crypto firms $10 million for failing to block transactions linked to sanctioned entities.

Experts warn that the Iran-CoinEx case could lead to stricter oversight of P2P trading. “If regulators don’t act, we’ll see more illicit activity flowing through these systems,” said Dr. Michael Chen, a cybersecurity researcher at MIT. “The key will be balancing innovation with accountability.”

How Do These Transactions Work?

Iranian users reportedly exploit CoinEx’s P2P system by creating multiple accounts to transfer funds in smaller, less conspicuous increments. Transactions are often routed through intermediaries in jurisdictions with lax crypto regulations, such as the United Arab Emirates and Singapore. TRM’s analysis tracked these patterns using IP address metadata and transaction frequency metrics.

The firm also noted that some wallets used “mixing services” to obfuscate the origin of funds. These tools, which shuffle cryptocurrency across multiple addresses, are legal in many regions but are frequently used for money laundering. “This is a cat-and-mouse game,” said TRM’s lead analyst. “As enforcement improves, bad actors adapt their methods.”

What’s Next for Crypto Exchanges?

The case has prompted calls for greater transparency in the crypto industry. In April 2024, the European Union proposed new rules requiring exchanges to disclose user identities for all transactions over €1,000. The U.S. Senate is also considering legislation to expand OFAC’s authority over decentralized platforms.

CoinEx has yet to comment on the specific allegations, but the exchange has announced plans to launch a “compliance dashboard” for users by late 2024. Whether such measures will be sufficient remains to be seen, as regulators and industry players continue to clash over the balance between privacy and security in the digital economy.