Binance says Blumenthal Iran sanctions probe relies on ‘demonstrably false’ reporting

Binance accused U.S. Senator Richard Blumenthal of relying on false and defamatory reports when opening a recent inquiry into alleged sanctions violations at the major global crypto exchange, in an open letter on Friday.

In February, Blumenthal, a top Democrat on an investigative panel within the Senate Homeland Security Committee, accused Binance of being a “repeat offender” of sanctions violations following reports in The New York Times, Fortune, and The Wall Street Journal that alleged two Binance partners, Hexa Whale and Blessed Trust, acted as middlemen for money laundering and allowed trade with Iranian government entities.

“Binance takes its legal obligations seriously and shares your interest in the safety of its platform. The recent reporting on which your inquiry relies, however, is demonstrably false, unsupported by credible evidence, and defamatory in several material respects,” Binance representatives wrote.

Blumenthal’s letter came years after Binance and former Binance CEO Changpeng Zhao pleaded guilty to failing to register as a money transmitting business and breaching sanctions.

The defendants paid $4.3 billion in penalties and agreed to independent compliance monitoring, among other corporate stipulations.

Zhao served four months in federal prison and was later pardoned by President Donald Trump, a move that also drew congressional scrutiny.

Binance pushes back

In the letter, Binance noted Hexa Whale and Blessed Trust, both based in Hong Kong, only had “indirect exposure to wallet addresses with potential ties to Iran.” The exchange also initiated a “proactive investigation in response to law enforcement inquiries,” and removed those service providers from the platform.

“Moreover, to our knowledge, no Binance account transacted directly with an Iran-based entity,” the letter reads.

Binance also said it uses more than 25 advanced tools for due diligence, transaction monitoring, sanctions screening, and behavioral analytics to detect and prevent illicit activity, which have helped drop its exposure to wallets allegedly involved in illicit activity by 97%, from “0.284% of total exchange volume to just 0.009%,” the letter said.

It has also reduced its exposure to the four major Iranian crypto exchanges by 97.3% in the last two years, to just $110,000 from $4.19 million.

In late February, a string of media stories accused Binance of facilitating Iranian crypto access. The New York Times reported Binance’s internal investigators discovered more than 1,500 accounts on the platform had been accessed from Iran and that about $1.7 billion had flowed from two Binance accounts to Iran-linked entities, including wallets tied to Iran’s Islamic Revolutionary Guards Corps.

The Wall Street Journal also reported that the internal probe identified Hexa Whale Trading moving roughly $500 million in USDT to the IRGC, which is designated as a terrorist organization by the U.S. and other countries.

Reports also alleged that Binance fired or suspended the internal investigators who discovered these flows, with Fortune reporting that several senior compliance officials have exited in recent months as the exchange searches for a successor to Chief Compliance Officer Noah Perlman.

“Binance has a rigorous compliance program that is consistently growing stronger,” Binance’s letter reads. “When there is credible risk information, Binance investigates, mitigates, offboards accounts, and reports to appropriate authorities. With respect to the matters described in the Letter, that compliance process was, in fact, effective.”