America’s sanctions authorities have struck at what appears to be the deepest layer yet of Iran’s cryptocurrency activity, freezing hundreds of millions of dollars in digital assets linked to the country’s central bank and allied militant groups.
The US Treasury’s Office of Foreign Assets Control (OFAC) has designated two cryptocurrency wallets as property of Central Bank of Iran, citing connections to the Islamic Revolutionary Guard Corps Qods Force and Hezbollah. In coordination with law enforcement, Tether froze roughly $344m held in the accounts, believed to be the largest on-chain seizure of Iranian sovereign crypto reserves to date.
The move highlights how sanctions enforcement is evolving alongside the financial technologies it seeks to police. Rather than targeting intermediaries such as exchanges, regulators are increasingly reaching directly into what analysts describe as the “reserve layer” of state-linked crypto infrastructure.
How is Iran using crypto wallets?
Data compiled by TRM Labs suggests the two wallets functioned less as transactional accounts and more as repositories of value. Together they received around $370m across nearly 1,000 transactions over more than five years, with inflows beginning in 2021. Outbound activity was minimal: less than 7 per cent of funds were ever moved, and even those transfers largely circulated within a closed network of related addresses.
Such behaviour is atypical of commercial or retail usage. Instead, it resembles sovereign reserve management, albeit conducted through digital tokens rather than traditional foreign exchange holdings. One wallet recorded no meaningful outward transfers at all; the other moved only a small fraction of its balance, mostly to affiliated accounts rather than exchanges.
The funds appear to have been largely accumulated by late 2023 and then left dormant until this week’s intervention. That pattern (steady accumulation followed by inactivity) fits what analysts say is a broader Iranian strategy of using cryptocurrencies as a store of value beyond the reach of conventional banking sanctions.
Bypassing the dollar-based financial system
The designation builds on earlier action in January, when OFAC targeted two UK-registered exchanges, Zedcex and Zedxion, also linked to the IRGC. Those platforms, according to TRM, processed around $1bn in transactions and formed part of a wider ecosystem enabling Iran to bypass the dollar-based financial system.
Taken together, the measures suggest a concerted attempt to map and disrupt an increasingly sophisticated network. TRM’s research describes a repeatable workflow: large inflows of dollar-pegged stablecoins, transfers across blockchains, conversion via decentralised finance protocols, and eventual routing through exchanges. The wallets sanctioned this week appear to sit at the entry point of that chain.
Iran’s reliance on such mechanisms is not trivial. TRM estimates that crypto-related flows tied to the country reached $11.4bn in 2024 and $10bn in 2025, indicating sustained and systemic use. Much of that activity is believed to be anchored around domestic platforms such as Nobitex, which analysts identify as a key bridge between local users and international networks.
Tether’s role has been educational
The involvement of a major stablecoin issuer is also notable. By freezing assets directly on-chain, Tether has demonstrated the degree of control that private firms can exert over ostensibly decentralised systems. This blurs the line between public enforcement and private compliance, raising questions about governance in the crypto ecosystem.
For regulators, the episode underscores both the promise and limits of digital transparency. Blockchain records allow authorities to trace flows with a granularity impossible in traditional finance. Yet the same technology also enables sanctioned actors to construct parallel systems that operate largely outside conventional oversight.
“Over the last few months, OFAC has taken unprecedented action against Iran’s use of crypto infrastructure,” said Ari Redbord, global head of policy at TRM Labs. “As the regime leans more heavily on cryptocurrency to move funds outside the US financial system, US law enforcement and regulators are working closely with private-sector initiatives… This is exactly the kind of public-private disruption needed.”
The broader implication is that economic statecraft is adapting to a new terrain. As cryptocurrencies become embedded in national financial strategies, sanctions policy must follow suit, probing not just the gateways of the system, but its deepest vaults.