When Compliance Becomes Optional: How Major Exchanges Continue Serving Sanctioned Markets

The cryptocurrency industry faces a credibility crisis as multiple licensed exchanges openly serve Iranian users despite explicit U.S. Treasury OFAC sanctions. This pattern of selective compliance creates unfair competitive advantages and threatens the sector's legitimacy.

The Rules Being Broken

OFAC sanctions explicitly prohibit cryptocurrency exchanges from:

• Processing transactions for Iranian residents

• Accepting Iranian identity documents for KYC

• Facilitating Iranian rial conversions

• Providing services from Iranian IP addresses

Violations carry severe penalties: multi-million dollar fines, asset freezes, and criminal prosecution. Yet evidence shows systematic violations across multiple platforms.

The Evidence

LBank: Active Accommodation

LBank, despite regulatory licenses requiring sanctions compliance, actively serves Iranian users through multiple channels:

• Accepts Iranian national IDs for KYC verification

• Enables Iranian phone numbers (+98) for registration

• Community managers confirm Iranian users face no restrictions: https://t.me/LBank_en/5849500

• Video evidence of signup with Iranian IP: https://drive.google.com/file/d/1lTIlMp2Q5H9Pp0FbUK8qqmPz6N4d-7l3/view

The platform implements geographic detection that enables Iran-specific features only when accessed from Iranian IPs, suggesting deliberate accommodation rather than oversight.

Google Trends data confirms sustained Iranian user engagement: https://trends.google.com/trends/explore?q=LBank

Bitunix: Systematic Violations

Bitunix demonstrates calculated circumvention of sanctions while maintaining regulatory licenses:

• Processes Iranian national IDs for verification

• Accepts Iranian phone numbers for registration

• Maintains full platform access from Iranian IP addresses

• Customer support explicitly confirms Iranian user acceptance

The platform's deliberate targeting of Iranian users, despite operating under licenses requiring OFAC compliance, represents willful violation of international sanctions.

Toobit: Deliberate Targeting

Toobit shows perhaps the most sophisticated approach to serving Iranian users:

• Accepts Iranian phone numbers for account verification

• Processes Iranian national IDs through KYC system

• Maintains unrestricted access from Iranian IP addresses

• Shows consistent Iranian search traffic in market data

The platform's targeted accommodation of Iranian users, while holding licenses requiring sanctions compliance, demonstrates systematic circumvention of regulations.

Tapbit: Using "Persia" to Obscure Violations

Tapbit employs deceptive terminology to mask its sanctions violations:

• Uses "Persia" instead of "Iran" to obscure servicing

• Accepts Iranian identification documents for KYC

• Customer support explicitly confirms Iranian user access: https://drive.google.com/file/d/1883oXEIR3_VRwvSMfaCo0UXXmE_7ce8H/view

• Community manager approval on video: https://drive.google.com/file/d/1flh66Gd9bfqisCX_qiL-Bvy4LN45aqo0/view

The Competitive Distortion

It's the case that compliant exchanges, which are investing millions in geo-blocking and monitoring systems, are operating under severe disadvantages. They are losing a lot of their traders to those competitors who just disregard sanctions, thus creating a very unfair marketplace in terms of competition.

The situation is of a competitive imbalance being very hard to bear when the non-compliant platforms come in to serve the markets with millions of users that the ruling exchanges must turn away. It is like imposing a regulatory requirement on some competitors and allowing others to be free.

Historical Context

Previous violations resulted in serious consequences:

• Binance: $4.3 billion settlement (2023)

• Poloniex: $7.6 million fine

• BingX: Currently under investigation for similar violations

Yet current violations appear more brazen, with exchanges openly advertising Iranian services rather than maintaining plausible deniability.

Industry Impact

Each violation provides ammunition to critics claiming cryptocurrency primarily serves illicit purposes. When licensed exchanges openly serve sanctioned markets, arguing for self-regulation becomes impossible.

This forces:

• Stricter oversight for all operators

• Higher compliance costs industry-wide

• Banking restrictions on crypto businesses

• Reduced institutional adoption

The Bottom Line

Several big exchanges provide proof that Iranian users are serving their purposes, even though there are obvious legal restrictions. It is not a matter of technical oversight but rather a deliberate noncompliance that disregards fair competition and regulatory legitimacy.

An industry that proclaims to transform finance through technology, takes rule-breaking at such a basic level as a sign of its great failure. Those who abide by the rules should be given the same opportunities as those who do not. It is the users who are entitled to a non-corrupting industry.

It is not a question anymore if there will be enforcement, but rather it is a matter of when and how strictly. In the financial world, the compliance bill is always due, and it is always higher than one thinks.