Author: Maria Noor

Maria Noor is currently working in the field of AI and is also an OSINT freelancer. She writes and publishes news articles in the field of cryptocurrency, helping to develop the new field of crypto journalism. Maria has been involved in a number of cryptocurrency projects using AI. She has a Bachelor’s in Media and Communication from the American University of Beirut (AUB).

Amid escalating economic challenges and international sanctions, cryptocurrency users in Iran are becoming increasingly concerned about the security and reliability of centralized exchanges. Reports have emerged that users have faced asset freezes and account blocks on international exchanges due to transactions related to Iranian centralized exchanges like Nobitex.

Because of primary and secondary U.S. sanctions, international centralized exchanges are prohibited from providing services to Iranian users. Strict Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations have made legal access to these platforms virtually impossible for Iranians. As a result, since mid-2017, following the Trump administration’s rise to power and the intensification of sanctions against Iran, local entrepreneurs have designed centralized exchanges dedicated to the Iranian market, filling the void left by international platforms.

Dominance of Local Exchanges in the Market

Research indicates that there are 90 cryptocurrency exchanges operating in Iran, more than 10 of which function as centralized exchanges with websites and apps for users. Published statistics show that approximately 15 to 19 million Iranians are active in the cryptocurrency market.

With 6 million active users, Nobitex has the most users among Iranian exchanges and is considered the largest centralized cryptocurrency exchange in Iran. Nobitex, as one of the largest digital currency exchanges in the country, has attracted international attention. In May 2024, two prominent U.S. senators sent a letter to the Secretary of Defense, the Secretary of the Treasury, and the National Security Advisor, expressing concerns about Nobitex’s alleged involvement in activities that could facilitate money laundering and terrorism financing for the Iranian government.

Investigations from Iranian sources, industry insiders, and open-source intelligence (OSINT) suggest that Nobitex has connections with the Iranian government and the Islamic Revolutionary Guard Corps (IRGC) and may collaborate with the government in violating international and U.S. sanctions related to money laundering and terrorism financing. This could explain the extensive support it receives from certain governmental sectors.

OSINT investigations and a review of the company’s registered information in Iran show that the main shareholders of this exchange have close ties with Iran’s Supreme Leader and are individuals who have engaged in economic activities aimed at violating sanctions laws. The main shareholders include Seyed Mohammad Baqer Kharazi, a relative of the Supreme Leader and a business partner of Mohsen Rezaee Mirqaed (founder of the IRGC and the first commander of its intelligence unit). Through his son, Seyed Mohammad Aghamir (who has changed his name to conceal his identity), and Mohammad Baqer Nahvi, they are the principal stakeholders of this exchange. Nahvi is an economic activist involved in violating Iran’s economic sanctions through air transport services.

Freezing of Iranian Users’ Assets Due to Connection with Nobitex

Multiple reports on Twitter and Telegram groups within the Persian-speaking crypto community indicate that users of the Nobitex exchange have experienced account and wallet restrictions after transferring funds from this centralized exchange to other wallets and international exchanges. Recently, following the publication of this exchange’s wallet information on the Arkham platform, widespread concerns among Iranian crypto activists on social networks have intensified.

Arkham and TRM Labs are blockchain data analysis companies that have identified and tagged many of Nobitex’s wallet addresses. Organizations like the Tether Foundation and other centralized stablecoin issuers may freeze these assets in compliance with regulations from the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC). The possibility of asset freezing adds another layer of risk for users who rely on these platforms for financial transactions.

Evaluation of Top Iranian Exchanges

To gain firsthand insight, an analysis was conducted on four leading centralized exchanges in Iran — Nobitex, Excoino, Wallex, and Bit Pin.

Nobitex

Established in 2017, this exchange has seen widespread adoption among Iranian users. According to its annual report published at the end of 2022, the exchange reported 314 employees. The number of users was stated to be 5,761,427. Sixty-eight million cryptocurrency trades were recorded in one year. Alleged connections with Iranian government entities and the potential impact of international sanctions on users’ assets contribute to the high risk of this exchange.

Excoino

Founded in 2017, major financial clients in Iran are among its customers. The company reports having 115 employees. As of 2024, the number of users was stated to be 3 million, with no newer information available. One hundred forty million cryptocurrency trades were recorded for this exchange.

Wallex

This exchange began operations in 2021 and reports having 200 employees. As of 2022, the number of users was stated to be 1 million.Rated as medium risk due Chainalysis has released a report detailing this exchange’s collaboration with an individual sanctioned by the United States, which could lead to increased scrutiny.

Bit Pin

This exchange started its activities in 2020 and reports having 210 employees. As of 2024, the number of users was stated to be 2.5 million. The main investor in this exchange is Patco Company, one of whose subsidiaries, Arya Hamrah Samaneh, serves as a front to circumvent U.S. sanctions in the telecommunications and computer equipment sector. The intensification of U.S. sanctions policies increases the likelihood of sanctions against Patsa’s subsidiaries.

Conclusion

Iran’s economy has come under significant pressure due to sanctions, high inflation, and increasing taxes. These conditions have driven many citizens toward cryptocurrencies to preserve their wealth and facilitate transactions. The outlook for cryptocurrency use in Iran is complex and fraught with challenges.

While local centralized exchanges offer accessible avenues for users amid international restrictions, they come with significant risks, including potential government surveillance and asset freezes due to sanctions. Users are advised to stay informed, conduct due diligence, and consider alternative methods for managing their cryptocurrency assets. Exploring decentralized platforms or adopting stringent personal security measures may provide safer avenues for participating in the cryptocurrency market.

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