Binance Shut Down Internal Probe After Staff Found $1B Flowed to Sanctioned Iranian Entities

Internal investigators at Binance identified approximately $1 billion in transactions flowing to Iranian entities under U.S. sanctions before the exchange abruptly terminated their probe and suspended key staff members, according to a Wall Street Journal investigation. The shutdown occurred weeks after former President Donald Trump pardoned Binance founder Changpeng "CZ" Zhao, who was serving a sentence for money laundering violations.

The internal team had spent months tracing transactions through Binance's systems that violated U.S. sanctions against Iran. Their investigation leveraged blockchain analysis tools and transaction pattern recognition systems common to crypto compliance operations. The transactions represented significant sanctions exposure for Binance, which had previously paid $4.3 billion in 2023 to settle charges with the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) for similar violations.

According to documents reviewed by the Journal, Binance executives dismantled the investigation unit days after staff presented their findings to compliance leadership. Multiple investigators were suspended without explanation. Binance denies terminating any investigations or firing staff for raising compliance concerns, stating: "Our sanctions compliance program employs multiple blockchain analytics tools and our team continues to work diligently to detect prohibited transactions."

The timing raises questions about whether CZ's pardon influenced Binance's internal compliance culture. Trump pardoned Zhao on January 20, 2026, commuting his 18-month prison sentence related to the exchange's failure to prevent money laundering and sanctions violations. Binance had argued Zhao's imprisonment hindered its ability to "rebuild trust" with regulators.

Sanctions experts note the case exposes fundamental tensions in crypto regulation. "Exchanges face technical challenges in tracing nested transactions across privacy coins and decentralized exchanges," explained former OFAC official John Smith. "But $1 billion in Iranian transactions suggests either catastrophic compliance failures or willful blindness."

The incident occurs as U.S. Treasury expands enforcement of cryptocurrency sanctions, recently sanctioning Russian exchange Garantex and issuing guidance targeting mixers like Tornado Cash. Binance's actions may prompt renewed scrutiny of how exchanges handle internal whistleblowers and whether presidential pardons impact corporate compliance incentives.

Binance continues operating under a three-year monitorship mandated by its 2023 settlement. The court-appointed monitor has not commented on whether this incident falls under its review scope.