Binance is once again facing questions over the effectiveness of its compliance controls after a Reuters investigation alleged that at least $676 million in cryptocurrency linked to an unlicensed Dubai exchange with alleged ties to Iranian financial networks flowed through accounts on the world's largest crypto exchange.

The report centers on Shelbit, a Dubai-based crypto platform accused of facilitating billions of dollars in transactions connected to Iranian online gambling operations, sanctioned entities and wallets associated with Iran's Islamic Revolutionary Guard Corps (IRGC).

While Reuters did not conclude that Binance knowingly processed sanctioned funds, the findings have reignited debate over whether major exchanges can identify sanctions-evasion networks before regulators or blockchain investigators expose them.

Reuters traces billions through alleged Iran-linked network

According to Reuters, Shelbit, operated by Iranian expatriate Siavash Kayvanpour, processed at least $4 billion in cryptocurrency transactions since May 2024. Blockchain analysis conducted as part of the investigation found that approximately $676 million from wallets linked to Shelbit ultimately reached Binance accounts.

Roughly $540 million of those transfers allegedly occurred after Dubai's Virtual Assets Regulatory Authority (VARA) sanctioned Shelbit in January 2025 for operating without the required license, raising questions about how funds continued moving through the network despite regulatory intervention.

Reuters described Shelbit as a financial hub connecting more than 2,000 Persian-language online betting websites, Iran's central bank and crypto wallets that Israeli authorities have previously linked to the IRGC. The investigation also reported that around $125 million within the broader network originated from Iran's central bank.

However, Reuters emphasized that its investigation did not establish that the IRGC directly controlled Shelbit or operated the broader network. The alleged connections are based on blockchain tracing and wallet associations rather than confirmed ownership.

Binance rejected several of Reuters' conclusions, saying Shelbit never maintained a corporate account on the exchange and that the transactions instead involved individual customer accounts.

According to Binance, an independent blockchain analytics provider did not initially classify the transactions as high risk. The exchange said it later investigated accounts linked to the activity, froze the relevant assets, offboarded affected users and reported its findings to law enforcement authorities.

The company also disputed Reuters' characterization of the transaction volume, arguing that only about $126.1 million could ultimately be traced to wallets connected to Iran and that approximately $24.1 million reached wallets associated with the IRGC.

Binance said the funds moved through multiple intermediary wallets before reaching its platform, arguing that its compliance procedures functioned as intended once suspicious activity was identified.

Critics, however, have focused on the timing. Reuters reported that blockchain investigator Rich Sanders alerted Binance to the alleged network as early as October 2025, prompting renewed debate over whether the exchange's compliance systems are proactively detecting illicit activity or responding only after outside parties identify it.

Stablecoins once again emerge as compliance challenge

The investigation also highlights the growing role of Tether's USDT in moving funds across jurisdictions.

Unlike Bitcoin, whose price volatility can complicate large transfers, USDT maintains a relatively stable value and offers deep market liquidity, making it attractive for both legitimate international payments and illicit financial activity. Investigators say stablecoins allow large sums to move across multiple wallets before eventually being converted through major exchanges such as Binance.

The issue carries additional weight because Binance is still rebuilding trust following its landmark 2023 settlement with U.S. authorities. The exchange pleaded guilty to sanctions and anti-money laundering violations and agreed to pay a $4.3 billion penalty after admitting it had failed to prevent prohibited transactions involving sanctioned jurisdictions, including Iran.

Separately, VARA issued a public notice on July 24 stating that Shelbit continued providing virtual asset services in Dubai without authorization despite previous enforcement action.

The regulator said the platform continued operating without a license, failed to conduct required know-your-customer (KYC) checks and marketed virtual asset services without regulatory approval. VARA said it imposed financial penalties and ordered Shelbit to immediately cease all unlicensed operations under Dubai's virtual asset regulations and anti-money laundering laws.

The case is also being monitored by the U.S. Treasury Department's Office of Foreign Assets Control (OFAC), adding another layer of regulatory scrutiny.

For Binance, the Shelbit allegations represent another high-profile test of the compliance reforms implemented since its 2023 settlement. While the exchange insists its controls worked once the suspicious accounts were identified, the investigation has once again raised the broader question facing the crypto industry: whether even the largest exchanges can reliably identify increasingly sophisticated sanctions-evasion networks before they are uncovered by regulators, journalists or independent blockchain researchers.