During interviews with Internal Revenue Service agents this past May, a former senior financial crimes investigator for Binance revealed that his departure followed a sudden suspension alongside several peers. The team had been probing two specific accounts suspected of funneling funds to Iran in direct violation of U.S. sanctions legislation.

Operation Loclock and the Alleged Cover-Up

According to a subsequently issued search warrant for the investigator's MacBook, Binance intentionally sidelined an internal inquiry designated as Operation Loclock. This probe targeted roughly 2,000 accounts allegedly operated by individuals inside Iran, which collectively transacted about $1.2 billion on the exchange, as detailed in the warrant and earlier reports. Conversely, a Binance spokesperson previously maintained that the investigation into the offending accounts was never terminated, asserting instead that the staff members were dismissed for mishandling client data rather than their findings.

The newly unveiled search warrant, alongside confirmations from individuals familiar with the matter, illustrates the expanding scope of the federal inquiry into Binance since the departure of those investigators. The IRS and the Department of Justice have since issued various subpoenas and warrants targeting both the exchange and several former employees. This development unfolds just three years after Binance and its founder, Changpeng Zhao, entered guilty pleas and incurred a $4 billion penalty for neglecting to halt transactions tied to sanctioned nations like Iran, Cuba, Syria, and Russian-occupied regions of Ukraine. Zhao later received a presidential pardon from Donald Trump.

"There is substantial evidence that Binance helped evade sanctions and launder more than a billion dollars from China to Iran and Iran-backed entities," states Gregory Bernstein, partner at Keller Anderle Scolnick LLP and legal counsel for the whistleblower.

Bernstein added that his client has received a subpoena to provide testimony before a federal grand jury operating in the District of Columbia.

Expanding Federal Scrutiny and Oil Laundering Allegations

Dugan Bliss, Binance's deputy general counsel, stated that the firm fully cooperates with law enforcement agencies and stays dedicated to eliminating malicious actors from its ecosystem. However, the company declined to comment when asked about the specific allegations outlined in the warrant, including claims that upper management failed to support Operation Loclock.

While Binance maintains that the internal investigators were terminated lawfully for violating data privacy policies, the company has refrained from offering further specifics.

The ongoing federal inquiry—acknowledged by the Justice Department earlier this year—focuses on the laundering of Chinese payments for Iranian oil via Binance. The investigation extends past the 2,000 Iran-associated accounts to focus on two distinct entities: Hexa Whale and Blessed Trust, two Chinese firms accused of shifting capital into crypto wallets ultimately linked to the Islamic Revolutionary Guard Corps. In September, the DOJ secured a seizure warrant for $61 million connected to illicit oil transactions, alleging these enterprises utilized Binance to launder proceeds from black-market Iranian petroleum sales to support the Iranian government and its proxies.

Furthermore, the former investigator informed the IRS that evidence pointed to a Blessed Trust account channeling funds to Iran while simultaneously covering internal Binance operational costs, such as staff salaries. Although earlier reports indicated Blessed Trust denied any wrongdoing while under contract with Binance for payroll services, the cryptocurrency platform severed ties with the company earlier this year.

Although formal criminal charges have yet to be filed, additional details are expected to emerge as outstanding subpoenas and warrants are processed. The ex-employee informed the IRS that an inspection of his MacBook would yield communications verifying corporate awareness of Iranian activity on the network, alongside internal messages from Binance's chief compliance officer criticizing the layoffs and defending the integrity of the ousted investigators.