The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) on Tuesday updated its Central Bank of Iran designation to include four additional cryptocurrency addresses as identifiers. A review of on-chain data shows those wallets together have received $165 million in stablecoins, and balances totaling $131 million were immediately frozen by their issuer, Tether.

The designation update expands OFAC’s financial blockade against the Central Bank, which has used cryptocurrency to sidestep sanctions, fund the regime, and funnel assets to regional partners, including Lebanon-based Hezbollah, a U.S.-designated terror group

The Central Bank’s crypto operations have come under additional scrutiny since the beginning of the war with Iran. Last month OFAC sanctioned major Iranian crypto exchanges that the Central Bank had used to move money in and out of stablecoins.

In the midst of the conflict, Iranian actors proposed levying a toll – in crypto – on all ships seeking passage through the Strait of Hormuz; Chainalysis assessed that shipping companies would face significant sanctions exposure for paying such a toll.

Iran’s use of stablecoins

Chainalysis’ research into the regime’s crypto habits reveal its preference for stablecoins. This choice makes sense: stablecoins are highly liquid assets accepted globally — important attributes for all users, legitimate or illicit. But stablecoins also pose a significant risk for illicit actors, as stablecoin issuers can freeze illicit funds at the direction of law enforcement agencies.

Tether has now frozen almost $475 million from wallet addresses identified by OFAC as belonging to the Central Bank of Iran, rendering nearly half a billion dollars in value inaccessible to the Iranian regime. Freezing a stablecoin balance on an address prevents it from spending or sending its balance.

On-chain analysis using Chainalysis Reactor reveals that the Central Bank of Iran addresses added to its designation received funds upstream from an institutional liquidity provider and an Asia-based payment processor.

FAQs

Who did OFAC sanction?

The U.S. Treasury Department’s OFAC updated its Central Bank of Iran designation to included four additional cryptocurrency wallet addresses controlled by the Central Bank of Iran.

How much money did the wallets hold?

These newly designated wallets received over $165 million in stablecoins, $131 million of which have now been frozen by their issuer, Tether.

Why is OFAC sanctioning the Central Bank’s crypto?

OFAC is sanctioning Iran’s Central Bank’s crypto wallets because the regime is using them to fund its operations, sidestep sanctions and funnel assets to regional terror partners.

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