The U.S. Department of Justice is seeking to confiscate $61 million in cryptocurrency that prosecutors say was connected to Iran’s illicit oil trade and intended to help finance the country’s military activities.

The DOJ filed a civil forfeiture complaint Monday, alleging that the digital assets represent proceeds from illegal sales of Iranian crude oil and petroleum products.

According to prosecutors, the funds were ultimately intended for the Iranian government and its military organizations, including the Islamic Revolutionary Guard Corps (IRGC), which the United States has designated as a terrorist organization.

Deputy U.S. Attorney Sean S. Buckley said the case demonstrates the government’s efforts to cut off what it describes as illegal funding used by Iran and its terrorist proxies.

Buckley alleged that Iran uses black-market sales of sanctioned crude oil to generate revenue for its military and support terrorism in the Middle East and elsewhere. He also said the funds contribute to other activities, including nuclear development and the creation of ballistic missiles capable of delivering nuclear payloads.

DOJ Traces $1.5B Iranian Crypto Pipeline

The forfeiture case comes as fighting between Iran and the U.S. has intensified since February, disrupting global oil supplies and contributing to higher energy prices.

Iran’s crude exports have reportedly fallen sharply amid a U.S. naval blockade and military activity around the Strait of Hormuz. Prosecutors allege that crypto has increasingly been used to circumvent those restrictions and allow Iran-linked trade to continue.

The DOJ said its investigation uncovered an underground financial network worth about $1.5 billion, internally referred to as “Entity A.”

Prosecutors allege the network moved proceeds from Iranian black-market oil transactions through a complicated system of unhosted cryptocurrency wallets. Unlike assets held through centralized exchanges or other intermediaries, unhosted wallets are controlled directly by users, potentially making the funds more difficult for authorities to freeze.

The network allegedly sent large amounts of money to an Iranian crypto exchange, as well as digital wallets and businesses linked to the IRGC.

Chinese Firms Allegedly Facilitated Crypto Transfers

The DOJ identified Chinese companies Blessed Trust and Hexa Whale as the primary facilitators responsible for coordinating most of the multimillion-dollar transfers.

According to prosecutors, both firms used Binance trading accounts to launder proceeds from Iran’s black-market oil business before directing the funds back to the Iranian government and affiliated entities.

Blessed Trust reportedly promotes itself as a digital-asset custody provider serving other financial institutions. Prosecutors allege that the company also provided fiat-to-crypto conversion services for transactions associated with Iran, sometimes involving U.S.-based cryptocurrency issuers.

Hexa Whale allegedly offered similar services while operating under the guise of a legitimate commodities brokerage.

The DOJ said both companies counted Chinese businesses involved in oil and petroleum-product trading among their customers.

Binance Denies Allowing Sanctioned Transactions

Binance said it maintains a zero-tolerance policy toward sanctions violations and illicit activity and rejected the suggestion that it permitted transactions involving sanctioned individuals.

A Binance spokesperson told CoinDesk that the exchange would continue cooperating with law enforcement authorities in the case.

The spokesperson said Binance investigates potential sanctions and illicit-finance risks and, where appropriate, restricts or freezes accounts, removes users from the platform and reports suspicious activity to regulators and law enforcement.