The U.S. Treasury has sanctioned Dubai‑based crypto exchange Shelbit and Iran‑based Aban Tether for processing billions in illicit transactions tied to Iran’s Islamic Revolutionary Guard Corps (IRGC), following a Reuters investigation.
Imposed Sanctions and Links to Illegal Transactions
The U.S. Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions against Shelbit, a Dubai‑based exchange, and Aban Tether, an Iran‑based platform. Both were accused of facilitating transactions for Iran’s central bank, illegal gambling networks, and wallets linked to the IRGC.
Founder Siavash Kayvanpour was also blacklisted for orchestrating a $4 billion sanctions‑evasion scheme.
The exchanges violated U.S. sanctions law by enabling Iran’s regime to bypass restrictions on its financial system. They processed crypto for entities already under sanctions, including Nobitex, Iran’s largest exchange, contravening OFAC rules and international anti‑money laundering (AML) standards.
How the Exchanges Operated as Vessels of Illegal Activity
Shelbit and Aban Tether became vessels of illicit activity by deliberately positioning themselves outside the reach of effective regulation and by exploiting the anonymity and speed of blockchain transactions.
According to the U.S. Treasury, these exchanges facilitated billions of dollars in transfers for Iran’s central bank, illegal gambling networks, and wallets linked to the Islamic Revolutionary Guard Corps (IRGC).
They acted as intermediaries that converted Iranian rials into stablecoins like Tether (USDT), which could then be moved across borders without touching the traditional banking system. This allowed sanctioned entities to bypass restrictions on dollar clearing and international correspondent banking.
The exchanges operated through layered structures.
Shelbit, despite its website being offline for months, continued to process transactions through hidden networks and affiliated platforms. It routed funds through gambling sites and mining operations, creating multiple layers of obfuscation to disguise the origin of funds.
Aban Tether, meanwhile, specialized in tether conversions, enabling Iranian actors to access liquidity in global markets while avoiding detection. These practices mirror classic money laundering techniques—placement, layering, and integration—but executed through crypto rails.
The Treasury press release highlighted that these exchanges were not simply passive conduits; they actively designed systems to evade sanctions. They used front companies, shell accounts, and offshore wallets to mask flows.
Through failure to implement basic anti‑money laundering (AML) and counter‑terrorism financing (CFT) controls, they became complicit in enabling terrorism financing and sanctions evasion. Their operations violated the International Emergency Economic Powers Act (IEEPA) and OFAC regulations, which prohibit U.S. persons and entities from dealing with sanctioned actors.
This case spotlights how crypto exchanges, even when nominally regulated, can be weaponized if oversight is weak or deliberately ignored.
The exchanges exploited regulatory arbitrage—operating in jurisdictions with lax enforcement, while serving clients in sanctioned countries. By doing so, they became vessels of illegal activity, undermining both international sanctions regimes and the integrity of the global financial system.
OFAC’s Oversight
OFAC sanctions are extraterritorial.
Even if Shelbit and Aban Tether are based abroad, they can be blacklisted if they transact in U.S. dollars, interact with U.S. persons, or facilitate transactions for sanctioned entities. Secondary sanctions penalize third parties dealing with them, effectively isolating them from global finance.
This is why Dubai‑based exchanges cannot escape U.S. jurisdiction: the dollar’s dominance and OFAC’s reach make compliance unavoidable.
Governing Rules and Regulations for Crypto Exchanges
Globally, exchanges are supposed to comply with AML/CFT standards under the Financial Action Task Force (FATF).
The “travel rule” also requires exchanges to share sender and receiver information, but enforcement is uneven.
Dubai’s Virtual Assets Regulatory Authority (VARA) has made strides in licensing exchanges, yet Shelbit operated outside its framework. Iran, under heavy sanctions, has no incentive to enforce FATF rules, making its exchanges natural hubs for illicit activity.
The gap demonstrates the paradox: regulation exists, but without consistent enforcement across jurisdictions, bad actors exploit gaps.
Internationally, OFAC sanctions lists, EU AML directives, and FATF recommendations set the baseline.
Locally, the Philippines has BSP Circular No. 944 (2017), requiring VASPs to register, implement KYC, and report suspicious transactions. BSP also enforces AMLC rules under the Anti‑Money Laundering Act, part of a framework that ensures that Philippine exchanges cannot operate anonymously and must submit to strict oversight.
Similar News in the Philippines
While the U.S. sanctions against Shelbit and Aban Tether indicate international risks, the Philippines has also faced challenges with virtual asset service providers (VASPs).
In 2017, BSP issued Circular No. 944, requiring all VASPs to register and comply with anti‑money laundering (AML) rules. Since then, several firms were licensed but later had their registrations revoked or voluntarily surrendered due to compliance failures.
For example, BSP has in past years removed VASPs that failed to maintain adequate KYC procedures or did not submit required reports to the Anti‑Money Laundering Council (AMLC). These revocations serve as reminders that licensing is not permanent; it is contingent on continuous compliance.
There have also been investigations into unregistered operators suspected of facilitating illicit transfers. In 2019, AMLC flagged suspicious crypto‑related activity linked to remittance channels, prompting BSP to tighten oversight.
While no Philippine VASP has faced U.S. sanctions, the local enforcement actions demonstrate that regulators are willing to revoke licenses and shut down operations if firms fail to meet standards. Thankfully, the central bank’s proactive stance contrasts with jurisdictions like Dubai or Iran, where enforcement gaps allowed illicit exchanges to thrive.
VASPs in the Philippines are Strictly Monitored
The Bangko Sentral ng Pilipinas (BSP) plays a central role in ensuring that crypto exchanges operate legally and safely.
BSP requires VASPs to register, implement know‑your‑customer (KYC) protocols, monitor transactions, and report suspicious activity. Licensed VASPs must also maintain adequate capital and liquidity, aligning with BSP’s broader prudential standards.
BSP’s oversight is not limited to licensing. It conducts regular examinations, requires submission of compliance reports, and coordinates with AMLC for investigations. This supervisory framework ensures that Philippine VASPs cannot operate anonymously or outside the law.
BSP also aligns its rules with Financial Action Task Force (FATF) recommendations, ensuring that Philippine exchanges meet international AML/CFT standards.
Through strict enforcement of these rules, BSP protects consumers, prevents illicit flows, and strengthens confidence in the crypto ecosystem. This is particularly important in a country with high crypto adoption, where millions of Filipinos use digital wallets for remittances and payments.
Short but Compliant List of PH VASPs
VASPs themselves are the frontline gatekeepers of crypto integrity.
Their role is to ensure that transactions are legal, safe, and transparent. This translates to implementation of robust compliance programs, conducting customer due diligence, and monitoring for suspicious activity.
VASPs must also cooperate with regulators, submitting reports and responding to investigations. In practice, this involves integrating AML/CFT controls into their platforms, using transaction monitoring tools, and educating customers about risks.
Licensed VASPs in the Philippines—such as Coins.ph, PDAX, BloomX, Maya Bank, and DOPAY—have invested in compliance infrastructure to meet BSP standards. Their role is not just regulatory; it is reputational.
Through demonstration of continued compliance, these providers build trust with customers and differentiate themselves from unregulated operators.
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