Illegal bitcoin miners accounted for 85% of cryptocurrency-based activity in Iran: Report
Bitcoin mining funneled more than $186 million to Iran-based cryptocurrency services between 2015 and 2021, according to a crypto crime report by Chainalysis. The report states that illegal bitcoin miners account for around 85% of cryptocurrency activity in Iran, which was also confirmed by the Iranian President.
According to information from the report, many exchanges, which operated in jurisdictions without sanctions, continued to provide financial services to Iranian companies. In 2021, services outside Iran received $1.16 billion from Iranian services, double the value received in 2020. Between January 1 and December 31, 2021, mining pool outflows from cryptocurrency to Iranian services averaged $343,000 worth of cryptocurrency per day, of which, bitcoin-based transactions accounted for about 80%.
According to the report, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) said that U.S.-based companies and individuals are prohibited from conducting transactions with Iranian companies, including its financial institutions and its central bank. In theory, U.S.-based companies could have been subject to sanctions or criminal prosecution if found in violation of OFAC sanctions. Iran is fueled by the possibility of having low-cost electricity to profitably mine cryptocurrencies like bitcoin. In 2019, the Iranian government created a licensing regime for cryptocurrency mining, and in March 2021, a think tank associated with the Iranian president’s office highlighted the benefits of the regime in a report.
Chainalysis Know Your Transaction (KYT), which is Chainalysis’s cryptocurrency compliance software, allows companies to monitor transactional exposure to Iranian entities while government agencies can identify such type of transaction counterparties to the help from Chainalysis Reactor, which provides insights into blockchain-based transactions.
(With information from Chainalysis Crypto Crime Report, 2022)