US Treasury sanctions crypto exchanges for first time in Iran enforcement action

The US Department of the Treasury sanctioned two cryptocurrency exchanges on Friday, marking the first time the government has blacklisted entire digital asset platforms under its Iran-specific financial sanctions program.

The Office of Foreign Assets Control (OFAC) added Zedcex and Zedxion to its Specially Designated Nationals (SDN) list, alleging the exchanges facilitated payments for Iran’s Islamic Revolutionary Guard Corps (IRGC) and processed funds for sanctioned Iranian entities.

The designation makes it illegal for US persons, companies, or financial institutions to conduct transactions with the platforms. Any US-based infrastructure providers, including cloud services or payment processors, must immediately cease operations with the exchanges or face potential sanctions themselves.

“This action is the first time OFAC has blacklisted entire exchange entities under Iran-specific financial sanctions,” according to a report from The Block.

Shift from wallet-level to platform-level enforcement

The sanctions represent a departure from previous enforcement patterns, where Treasury typically targeted individual wallet addresses or sanctioned persons rather than the platforms themselves.

By sanctioning the exchanges as entities, OFAC is effectively cutting off their ability to operate within the US financial system or utilize US-based technology infrastructure. The move signals a more aggressive enforcement posture toward platforms that fail to implement adequate compliance controls.

Treasury Secretary Scott Bessent framed the action as part of a broader effort to dismantle what he described as “shadow banking” networks used by the Iranian regime.

“President Trump has directed the Treasury to continue targeting Iranian networks that enrich themselves at the expense of the Iranian people,” Bessent said in a statement accompanying the sanctions announcement.

Alleged Iranian connections

According to OFAC’s designation, Zedcex and Zedxion allegedly processed transactions for Babak Morteza Zanjani, an Iranian billionaire who was recently released from prison. The Treasury alleges Zanjani operates oil-for-crypto conversion schemes on behalf of Iranian state interests.

The exchanges are also accused of facilitating fund transfers for IRGC-linked entities, though specific transaction details were not disclosed in the public designation.

Industry implications

The sanctions arrive amid heightened regulatory scrutiny of cryptocurrency platforms’ compliance infrastructure. Recent guidance from OFAC has emphasized that exchanges bear responsibility for screening customers and transactions against sanctions lists, with technology itself not serving as an excuse for non-compliance.

Compliance analysts suggest the action may prompt other non-US exchanges to strengthen Know Your Customer (KYC) and transaction monitoring systems to avoid similar designations.

“The 2026 regulatory lens is focused squarely on intermediaries,” according to a recent compliance report from MEXC. “Platforms without real-time proof of reserves and strict KYC are increasingly viewed as regulatory risks.”

The move also raises questions about the future of privacy-focused exchanges and platforms that offer reduced KYC requirements, though Treasury has not indicated whether additional enforcement actions are planned.

What the sanctions mean

Entities on the SDN list face comprehensive asset freezes. Any property or interests in property within US jurisdiction must be blocked and reported to OFAC.

For cryptocurrency exchanges, this effectively means:

• US users cannot legally access the platforms
• US-based infrastructure providers (cloud hosting, payment processors) must terminate services
• Any US financial institution that processes transactions for the exchanges faces sanctions risk
• Global entities with US exposure may avoid the platforms to prevent compliance issues

The sanctions do not directly affect non-US persons operating outside US jurisdiction, though the designation creates significant operational challenges for any platform seeking to maintain global reach.

Administration approach

The Trump administration has signaled support for domestic digital asset development while taking a harder line on platforms it views as facilitating sanctions evasion or serving adversarial nations.

The dual approach seeks to encourage regulated crypto innovation within the US while cutting off access for platforms that operate outside compliance frameworks or serve sanctioned jurisdictions.

Whether this represents a one-time targeted action or the beginning of broader platform-level enforcement remains unclear. OFAC has not published additional guidance on criteria that might subject other exchanges to similar sanctions.