US lawmakers are intensifying scrutiny of the crypto sector, with a renewed binance probe now zeroing in on alleged sanctions evasion and terrorist financing links.
Summary
US senators demand records from Binance
More than a dozen US senators have turned their attention to Binance, the worlds largest crypto exchange by trading volume. On Tuesday, members of the Committee on Homeland Security and Governmental Affairs opened a fresh line of inquiry into the platform’s historical dealings and compliance controls.
Binance, which recorded more than $9.9 billion in trading volume today, is at the centre of the new investigation. The committee is demanding extensive records on alleged ties between the company and terrorist organisations said to be operating on behalf of Iran. However, Binance continues to insist that it complies with all applicable sanctions and anti-money laundering rules.
The committee is chaired by Republican Senator Rand Paul of Kentucky. Its push for documents is being led in practice by Connecticut Senator Richard Blumenthal, the ranking member of the Permanent Subcommittee on Investigations and a senior Democrat. That said, lawmakers from both parties are now pressing Binance for answers.
In a formal letter, Blumenthal wrote: “I therefore demand that you provide the Permanent Subcommittee on Investigations records and information related to Binance’s role in Iranian money laundering and its repeated failure to prevent illicit use by sanctioned entities, terrorist organisations, and other criminal actors.” The letter underscores how national security concerns have become central in the political debate around digital assets.
Focus on Hexa Whale and Blessed Trust
The investigation follows a series of explosive reports published in February. These reports allege that Binance ignored internal warnings that sanctioned entities used its platform to launder nearly $2 billion in illicit funds. Moreover, they suggest that certain partners acted as intermediaries for entities linked to the Iranian government.
Specifically, the senators’ inquiry highlights two company partners, Hexa Whale and Blessed Trust. According to the reporting, these entities allegedly operated as intermediaries on behalf of Iranian government bodies, helping move funds through Binance accounts. However, none of these claims have been proven in court to date.
A Binance spokesperson responded cautiously, stressing the limits on what the company can reveal. “While we cannot comment on specific users or disclose details that could compromise ongoing inquiries, we can clarify the process followed and correct clear inaccuracies,” the spokesperson said. The exchange has repeatedly argued that recent coverage is based on incomplete or mischaracterised information.
Senator Paul’s inquiry leans heavily on reporting from Fortune, The Wall Street Journal, and The New York Times. These outlets cite anonymous sources and internal documents to describe what they say are systemic weaknesses in Binance’s sanctions controls. However, the company maintains that it has significantly upgraded its compliance framework over the past several years.
History of sanctions and compliance failures
The media reports referenced by lawmakers portray a firm still struggling to keep sanctioned entities off its platform, even after past enforcement actions. In 2023, Binance and its then-CEO Changpeng Zhao pleaded guilty in the United States to failing to implement adequate anti-money laundering and anti-terrorist financing safeguards.
As part of that landmark settlement, Binance agreed to pay a record $4.3 billion fine in 2023 and to operate under oversight from two independent monitors reviewing its compliance practices. Zhao stepped down as CEO and later served four months in prison in 2024. Moreover, the case became a reference point for regulators worldwide seeking to tighten control over major exchanges.
Despite these penalties, fresh allegations have emerged about flows connected to Iran-backed groups. According to reports, from March 2024 to August 2025 Binance’s own compliance team identified that roughly $1.7 billion in transactions had moved through the exchange to support organisations such as Yemen’s Houthi militants. These revelations, if accurate, raise serious questions about the effectiveness of enhanced controls.
After disclosing these flows internally, members of the compliance team were reportedly dismissed. This alleged retaliation has amplified concerns among lawmakers about whether the binance probe and internal controls are robust enough to catch and stop suspicious activity. However, Binance has not publicly confirmed the firing details or the figures cited in the reports.
Blumenthal was direct in his assessment. “Binance is a repeat offender,” he wrote. “It has long been aware that the Iranian regime and its terrorist proxies use its cryptourrency platform as a convenient and reliable means to bypass international sanctions, anti-money laundering controls, and other banking restrictions.” That said, the company continues to argue that critics are ignoring the scale of its recent investments in compliance.
Political dimensions and Trump connections
The latest Senate inquiry also has a strong political element. For Democrats, the case offers another line of attack against former President Donald Trump and his perceived friendliness toward the digital asset sector. They have increasingly linked Binance to broader debates about national security and foreign influence.
Trump pardoned Changpeng Zhao in October, a move that remains controversial in Washington. Blumenthal and other Democrats have tried to connect that pardon with Binance’s business relationship with the Trump family crypto venture World Liberty Financial. According to critics, these ties allowed the exchange to “evade accountability and influence the White House.”
Binance and Zhao firmly deny that the pardon was related to the firm’s partnership with the Trump family’s crypto project. They have insisted that the clemency decision was independent of any commercial dealings. Nevertheless, the optics of Zhao appearing at the Trump family’s World Liberty Forum in February have kept the controversy alive in the media and on Capitol Hill.
Binance pushes back on sanctions claims
Amid growing scrutiny, Binance has repeatedly rejected suggestions that it has facilitated systemic iran money laundering or provided a safe harbour to sanctioned actors. The exchange argues that its controls are in line with, or stricter than, those of many traditional financial institutions operating at comparable scale.
In a statement issued on February 22, the company said: “Recent reporting on Binance’s sanctions compliance relies on incomplete and mischaracterised accounts that do not reflect all of the facts and the full investigative record.” Moreover, it reiterated that it cooperates with regulators and law enforcement agencies around the world when suspicious activity is detected.
The company repeated its earlier position: “While we cannot comment on specific users or disclose details that could compromise ongoing inquiries, we can clarify the process followed and correct clear inaccuracies.” This formulation has become a standard line in Binance’s responses to media coverage about sanctions and terrorist financing risks.
Withers Bergman LLP, the law firm representing Binance, has taken an even sharper tone. In a letter dated February 24, it described The Wall Street Journal‘s coverage as “false, seriously misleading to your readers, and defamatory of our client.” However, the paper has stood by its reporting, and senators are now using those articles as a foundation for their questions.
As the Senate investigation proceeds, Binance faces simultaneous pressure from regulators, politicians, and major media outlets. The outcome of this latest scrutiny could shape how legislators treat large crypto exchanges in future laws on sanctions, compliance, and market oversight.
