$1 Billion Sanctions Evasion Network Exposure: How UK Exchanges Became the "Money Laundering Channel" for the Iranian Revolutionary Guard

Blockchain analysis company TRM Labs recently released a report revealing a large-scale sanctions evasion network. Since 2023, the Islamic Revolutionary Guard Corps of Iran has used two UK-registered crypto exchanges, Zedcex and Zedxion, to transfer approximately $1 billion to evade international sanctions. This incident not only exposes compliance vulnerabilities in crypto exchanges but also serves as a wake-up call for the entire industry.

Specific Methods of Sanctions Evasion

Concealed Exchange Identities

Zedcex and Zedxion appear to be two different exchanges, but in reality, they are two brands operated by the same company. This “one entity, two faces” setup is a common method to evade scrutiny. By dispersing brands, it becomes more difficult for regulators to track, while creating the illusion of multiple independent platforms for users.

Key Characteristics of Fund Flows

According to TRM Labs’ analysis, transactions related to the Iranian Revolutionary Guard account for 56% of the total trading volume on these two exchanges from 2023 to 2025. More notably, the vast majority of transactions are conducted on the Tron network using USDT. This choice is not arbitrary: Tron is widely used due to its low transaction costs and fast processing speeds, and USDT as a stablecoin facilitates quick and covert fund transfers.

Fund Scale and Growth Trends

Data shows that 2024 was a turning point, with fund flows skyrocketing 25 times. This likely reflects Iran increasing efforts to evade sanctions through crypto channels in response to stricter sanctions. The decline in 2025 may be due to increased regulatory scrutiny and technical investigations.

Deep Industry Insights

Exchange Compliance Vulnerabilities

This incident exposes a harsh reality: even exchanges registered in developed countries (like the UK) can be tools for sanctions evasion. This is not an isolated case but reflects the overall compliance challenges faced by the industry. Many exchanges still have significant gaps in their AML (Anti-Money Laundering) and KYC (Know Your Customer) mechanisms.

Dual Risks of Stablecoins and Tron

This event also brought stablecoins and the Tron network into the spotlight. While these tools are neutral in themselves, their features—low cost, high efficiency, and low regulation—are exploited by malicious actors. This puts the entire ecosystem under reputational pressure and may lead to stricter future regulatory scrutiny.

Value of On-Chain Analysis

TRM Labs’ ability to trace and analyze these fund flows demonstrates that on-chain analysis technology has become quite mature. This provides tools for law enforcement and exchanges but also means that any attempt to evade sanctions risks being uncovered.

Progress in Regulation and Anti-Fraud Measures

According to relevant information, the industry has established a more comprehensive anti-fraud system. T3 FCU (a joint effort by TRON DAO, Tether, and TRM Labs) has set up cooperation mechanisms with over 30 law enforcement agencies worldwide, freezing over $300 million in related assets. This indicates that while criminals are seeking loopholes, regulators are continuously strengthening their defenses.

Summary

TRM Labs’ report reveals a sanctions evasion network worth about $1 billion, operating by exploiting exchange compliance gaps, the covert nature of crypto transactions, and the efficiency of networks like Tron. The key takeaways from this incident are threefold:

First, exchange compliance checks need to be more rigorous and ongoing, especially for large and suspicious transactions. Second, stablecoins and public blockchain ecosystems must assume greater social responsibility and establish more robust risk control mechanisms. Finally, the industry must recognize that the transparency advantage of crypto (on-chain traceability) must be combined with stronger law enforcement cooperation to effectively prevent misuse by malicious actors.

In the short term, this incident may lead to increased regulatory scrutiny of crypto exchanges in the UK and other regions. In the long term, it will drive the industry toward higher compliance standards.