Washington must plug loopholes in Iran-Russia cryptocurrency trade

The fact that the Islamic Revolutionary Guard Corps, Hamas, and Russian state-backed entities used the same settlement mechanism is damning.

By Leonid Baratz, Middle East Forum

On October 1, 2026, the U.S. Department of the Treasury designated the A7 Network, a shadow banking arrangement to help Russia and Iran evade sanctions, as a transnational criminal organization.

The Treasury Department’s Financial Crimes Enforcement Network proposed cutting its third-country front companies off from the U.S. financial system.

Treasury reported that a Russian payment network that fugitive Moldovan politician Ilan Shor led and the Russian “defense bank” Promsvyazbank built supported Iran’s Islamic Revolutionary Guard Corps and “Iranian proxies, such as Hamas.”

Promsvyazbank services nearly 70 percent of Russia’s defense contracts. While the October 1 action is a good start, it does not go far enough.

The Treasury Department says those front companies processed over $17 billion between January 2025 and June 2026 to help Iran’s central bank, the Islamic Revolutionary Guard Corps, and Iran-backed terrorist organizations to move funds.

One A7 Network front company even dealt directly with Iran’s shadow fleet.

Blockchain records show how money moves through these various banks, companies, and entities.

On August 7, 2026, the Treasury Department designated Shelbit, an Iranian platform with companies in Georgia, Poland, and the United Arab Emirates, for moving funds to Islamic Revolutionary Guard Corps wallets.

TRM Labs, a leading blockchain intelligence and data analytics company, traced $6.3 billion through Shelbit-linked wallets, including $318 million in exposure to A7.

On September 17, 2025, Shelbit sent $2 million in four transfers to a wallet that Israel’s National Bureau for Counter Terror Financing later designated as Hamas infrastructure.

This Israeli designation reinforces the connection between these settlement layers and Hamas financing.

TRM Labs cautions that on-chain data show where money traveled, but not who knew what.

Still, the fact that the Islamic Revolutionary Guard Corps, Hamas, and Russian state-backed entities used the same settlement mechanism is damning.

Shelbit, A7, and TokenSpot share one settlement layer, with the stablecoin USD Tether (USDT) as the dominant network to move money between parties.

Each of the platforms faces sanctions or pending rules, but the U.S. Treasury does not treat them as tentacles on the same octopus.

That octopus is now Sberbank, which connects, coordinates, and legalizes the end result.

Other loopholes remain.

On June 2, 2026, the U.S. Department of the Treasury’s Office of Foreign Assets Control designated Nobitex, the largest cryptocurrency exchange in Iran, and three other Iranian domestic exchanges, forcing Iranian capital toward offshore layers like Shelbit and onto parallel Russian systems.

Federal Law 282-FZ, which Russian President Vladimir Putin signed on August 4, 2026, has allowed Russian firms to settle foreign trade in digital currencies. Kaplan Panesh, deputy chairman of the Duma’s budget committee, said the law enables companies to pay partners while “circumventing sanctions.”

Sberbank, under full U.S. sanctions since 2022, immediately launched crypto-settlements for foreign trade, creating state-backed channels alongside A7.

On September 14, 2026, the U.S. Treasury designated VTB Bank for building ruble-rial channels with Iranian banks and warned foreign banks to cut ties.

Critics argue that secondary sanctions on Russian banks risk commercial spillover for third-country allies, but the exposure is narrow by design: Executive Order 13902 reaches only foreign banks that knowingly clear Iranian flows; ordinary trade with Russia’s neighbors stays outside its scope.

The Kyrgyz mechanism also shows the problem.

On October 6, 2026, TRM Labs assessed that TokenSpot, a licensed Bishkek exchange, operates as a front for Grinex, the successor to Garantex, a sanctioned Russian exchange.

TokenSpot sent A7 about $680 million and appears among Shelbit’s counterparties. The United Kingdom sanctioned TokenSpot two days later.

Washington has not followed suit, and on October 10, Kyrgyzstan’s regulator still listed TokenSpot as licensed. Washington should press regulators in Bishkek to revoke its license.

Treasury should treat A7, Shelbit, TokenSpot, and 282-FZ channels as one interconnected pipe.

The Financial Crimes Enforcement Network’s final rule should both cover Iranian settlement platforms and share its non-public sub-agent list with regulators in Georgia, Poland, the United Arab Emirates, and Kyrgyzstan.

The Office of Foreign Assets Control should designate TokenSpot and state publicly that any Russian bank or licensed intermediary clearing crypto payments for Iranian counterparties under 282-FZ will face VTB Bank’s fate.

Finally, Treasury should enforce Section 8 of the Guiding and Establishing National Innovation for U.S. Stablecoins Act, which requires the Treasury Department to bar U.S. platforms from listing foreign stablecoins if issuers ignore freeze orders.

A Senate minority staff report revealed that 84 percent of 846 sanctioned Iran-linked wallets used USDT stablecoin and that Tether still had not blacklisted central bank wallets leaked online in December 2025.

Treasury must issue freeze orders for USDT in A7-linked wallets, just as Tether froze $344 million in Iranian central bank funds in April 2026.

That any network funding the Islamic Revolutionary Guard Corps and Hamas still settles transactions in dollar-pegged tokens reflects failure by Washington to close all the loopholes and dry up terrorist funding.

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