If your Bitcoins crossed paths with Iranian wallets, Run!  

December 4, 2018 5:26 pm

Iran figured if could bypass US-imposed sanctions on its oil, banking, and other asset-rich sectors by going crypto and finding shelter behind a secretive blockchain.

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), will have none of it.

And now no one trading Bitcoins in the vicinity of Iranian wallets is safe from prosecution.

Related: Inflation, devaluation and now sanctions. Iran on the brink

Wallet addresses revealed

OFAC announced that two Bitcoin (BTC) addresses tied to Iran residents Ali Khorashadizadeh and Mohammad Ghorbaniyan were being added to its Specially Designated Nationals sanctions list, a first for the office, reported Coindesk.

Iranian sources have told CoinDesk that some of them are no longer able to access the cryptocurrency swap platform ShapeShift, even when using virtual private networks (VPNs).

Many Iranian have been using BTC for two years, mining and sending remittances to family abroad, but the security and privacy features in some BTC wallets, are becoming worrisome for these people.

Related: Iran goes crypto to evade US sanctions despite $5.77m Bitcoin bust

So now, many are favoring more private wallets.

“Some of the favored wallets among Iranians are Electrom, Atomic, Exodus, Samourai Wallet and Wasabi Wallet, especially its CoinJoin feature that sends many transactions in batches all at once to make it harder to track specific wallets. According to several Iranian developers, interest in the privacy coin zcash is also far more common these days,” says CoinDesk.

Forbidden/sanctioned coins become tainted along the user and retail chains, creating sticky problems for less tech-savvy BTC users who are not familiar with tracking blockchain data specific coin addresses.

Read McAfee Labs: Cryptocurrency mining surge continues in Q2

Mining is cheap in Iran

Iran subsidizes electricity and this makes cryptocurrency mining relatively affordable. Typically, it is profitable to mine as long as Bitcoin is at $5000 or more. At less than $4000, many are selling their mining equipment but not Iranians.

Image courtesy of Bitcoinexchangeguide.com

BTC users in Iran are mostly young people who are interested in technology, and Coindesk reveals that many in Iran are promoting healthy networks of private BTC wallets to stay out of reach of governments and escape sanctions.

Read: Bitcoin, altcoins bouncing back, but main issue remains unchanged

The blockchain is not secure anymore

In revealing the specific addresses, which are a unique combination of random letters and numbers that represent a destination to send Bitcoins, OFAC has shattered the myth of BTC payment privacy, according to Bloomberg.

“We are publishing digital-currency addresses to identify illicit actors operating in the digital-currency space,” Sigal Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence, said in the statement.

The addresses linked to Khorashadizadeh and Ghorbaniyan processed over 7,000 transactions in Bitcoin worth millions of U.S. dollars, OFAC said.

Some of those Bitcoins were derived from payments made to attackers that used the SamSam ransomware to attack more than 200 victims.

Read: Could Bitcoin whales drown you in more crypto debt?

The Bitcoinexchangeguide.com says SamSam victims included hospitals, universities, government agencies, and corporations.

“The ransomware would attack a computer or a server, quietly encrypting data and locking it behind a password. Users would be required to pay a fee (in bitcoin) to unlock the files. Otherwise, the files would be deleted,” described The Bitcoinexchangeguide.com

“The Iranian pair allegedly processed 6,000 BTC ($25 million) in illicit profits in partnership with the ransomware creators. The two used 40+ different cryptocurrency exchanges, including multiple US-based exchanges, to sell the funds and exchange them into Iranian Rial,” the site added.

Bloomberg says: “While payments are anonymous, they are not private since they are recorded on a public database known as the blockchain. In addition, there are a number of companies that can track the movement of digital assets between wallets.”

“Some crypto investors initially drawn to the ideas behind Bitcoin are now turning to a raft of other digital assets that may offer greater privacy. So-called privacy coins, which include tokens such as Monero, are gaining favor in some quarters.”

Read: Bitcoin’s current death candle: Bloodbath crash

OFAC on Iranian crypto

CoinDesk said that in October 2018, and in light of the U.S. government’s decision to withdraw from the Iran nuclear deal and re-impose certain sanctions against Iran, the Treasury Department issued an advisory warning businesses about Iran’s efforts to fund illicit activities abroad.

The advisory described the Iranian regime’s practice of circumventing financial restrictions by transacting in precious metals, misusing exchange houses, counterfeiting currency, and transacting in “virtual currencies.”

“In warning about the risks of cryptocurrencies, the advisory recommended specific compliance steps for crypto companies, including “reviewing blockchain ledgers for activity that may originate or terminate in Iran,” using software to “monitor open blockchains,” and screening customers against the sanctions list,” wrote CoinDesk.

Follow AMEinfo on Facebook , LinkedIn, and Twitter , and subscribe to our newsletter at the bottom of this page.


Hadi Khatib
By Hadi Khatib
Hadi Khatib is a business editor with more than 15 years' experience delivering news and copy of relevance to a wide range of audiences. If newsworthy and actionable, you will find this editor interested in hearing about your sector developments and writing about it.