TL;DR: Binance is investing $100 million in Circle and expanding their five-year USDC partnership, but renewed scrutiny over Binance’s alleged links to Iranian sanctions violations, its handling of customer data, and regulatory setbacks in Europe are clouding the contract.
Key Takeaways:
The Binance digital asset exchange has expanded its stablecoin tie-up with USDC issuer Circle (NASDAQ: CRCL), but reports of new probes into Binance’s ties to Iranian sanctions violations spoiled this party.
On Tuesday, Binance and Circle unveiled an expansion of their existing partnership to promote Circle’s USDC on Binance’s platform. The new five-year deal will see Binance take a $100 million stake in Circle, while expanding the exchange’s USDC promotions, “especially across emerging markets.”
That last bit is a shot across the bow of Circle’s chief rival Tether, issuer of the market-leading USDT stablecoin. Tether has established a firm foothold in emerging markets as a form of payment, remittances, and a way to preserve value in countries with unstable fiat currencies. Tether CEO Paolo Ardoino has yet to publicly comment on the deal.
Binance’s $100 million investment was made via a private placement of nearly 1.24 million of Circle’s Class A common stock at a 5% discount to the share price. Binance has agreed not to shift these shares for “a period of up to two years” from the closing date. Circle investors greeted Tuesday’s announcement with a shrug, as the share price rose briefly before sinking back to where it started the day and closing Tuesday at $94.59 (+0.1%).
The companies’ CEOs did the obligatory mutual backscratching, with Circle’s Jeremy Allaire praising Binance for “becoming the most widely used wallet in the world for dollar stablecoins.” Binance’s Richard Teng hailed Circle as “one of the most credible issuers in the world” and said the expanded partnership represented Binance’s “long-duration conviction” in USDC.
Circle’s deal with Binance began in December 2024 and involved a $60.25 million upfront payment from Circle plus a ‘monthly incentive fee’, while Binance agreed to hold between $1.5 billion and $3 billion worth of USDC on its platform.
Stablecoin issuers like Circle pay handsomely for exchanges to promote their tokens to customers. Circle has a revenue-sharing deal with Coinbase (NASDAQ: COIN) and announced a deal with the OKX exchange earlier this month. Circle reported paying over $410 million in these ‘distribution and transaction costs’ in just the three months ending June 30.
Iran. Again.
Unfortunately, Binance’s Circle news was preceded by a Bloomberg report about the Manhattan U.S. Attorney’s office investigating whether Binance ‘knowingly’ allowed trading on its platform that violated U.S. economic sanctions on Iran. The Department of Justice’s (DoJ) D.C. criminal division is reportedly assisting the investigation, the specifics of which weren’t disclosed.
In response, Binance issued a statement saying it maintains “a zero-tolerance policy for sanctions violations,” adding that it “fully” cooperates with law enforcement and remains “committed to rooting out and shutting down bad actors.”
On September 14, the same Manhattan U.S. Attorney’s office filed a civil forfeiture complaint on $61 million worth of USDT linked to “black-market sales of sanctioned Iranian crude oil.” The complaint features a section titled “the use of Binance accounts to transmit the proceeds of Iranian oil sales.”
The application for the seizure warrant cites three Binance accounts containing assets to be seized. However, the application also cites a February 2025 email from a Hamas military account instructing donors that when sending digital assets, “it is preferable not to use the ‘BINANCE’ platform to transfer support.”
The email said it’s okay to buy tokens on Binance, but to transfer them to a different wallet before sending them to Hamas. (The email recommends Trust Wallet, which is owned by Binance founder Changpeng ‘CZ’ Zhao, as well as the Bybit and OKX exchanges, or stablecoin payment platforms Kast and Redotpay.)
In response to this complaint, Binance CEO Teng tweeted that “this case was not filed against Binance and does not allege any wrongdoing by Binance.” Teng said Binance “did not permit any transactions with sanctioned individuals.”
Reports of Iranian-linked accounts on Binance engaging in U.S.-barred activities aren’t new. In February, Binance sued the Wall Street Journal for reporting that the exchange had sacked members of its compliance team after they flagged over $1 billion worth of digital assets passing through the exchange to Iran-backed terror groups.
In March, the Journal published its initial report that the DoJ was probing Binance’s Iranian connection, although it couldn’t determine whether that probe was focused on the exchange itself or just its customers.
In May, the Journal reported that Iran built a ‘secret payment network’ that made $850 million worth of transactions in just two years, mostly via a single Binance account. The WSJ added that Binance’s internal compliance teams had flagged the activity on multiple occasions, but the account in question remained open until this January.
At the time of May report, Teng claimed the article contained “fundamental inaccuracies,” insisted that the exchange “did not permit any transactions with sanctioned individuals,” and said the transactions occurred “before these individuals were sanctioned.”
In July, Reuters reported that Iran utilized an unlicensed Dubai-based exchange called Shelbit and a compromised network of over 2,000 illegal Farsi-language online gambling sites to conduct at least $4 billion worth of transactions. Around $676 million of this was sent via Shelbit to Binance wallets since May 2024, including $540 million transferred after Dubai regulators fined Shelbit in January 2025 for operating without permission. Iran’s central bank and the Iranian Revolutionary Guards Corps (IRGC) were suspected of controlling this network.
Around $900 million worth of transfers between Binance customers in the U.S. and Iran were cited in the exchange’s $4.3 billion settlement with U.S. authorities in November 2024 for violating the Bank Secrecy Act and U.S. sanctions imposed by the Treasury Department’s Office of Foreign Assets Control (OFAC).
Russia Russia Russia
In July, the New York Times reported that Binance was making it more difficult for global law enforcement agencies to probe suspected crypto-related crimes.
But in August, Reuters reported that Binance had given Russian authorities customer information that was used to bring terrorism financing charges against a Russian IT specialist who’d donated money to Ukraine’s military after Russian’s 2022 invasion.
Binance handed over the data last year, despite publicly claiming to have exited the Russian market in 2023 because operating there “is not compatible with Binance’s compliance strategy.” As such, it’s unclear why Binance would have felt compelled to hand over customer data to Russian authorities.
Reuters reported that the customer in question held a Bulgarian residency permit and was registered with Binance as a European Union resident. That means Binance may have violated EU data protection laws in handing over his data to Russian authorities. Binance rejected this view, but didn’t elaborate on its reasoning in the article.
Teng later tweeted that Binance “will always protect user rights” but “cooperation with lawful investigations is part of our responsibility, and we do so in a neutral, structured, and legally compliant manner.”
En garde, Lagarde
Binance’s reputational issues were suspected of playing a role in June’s decision by Greece’s Hellenic Capital Market Commission (HCMC) to reject the exchange’s application for a license to operate under the EU’s Markets in Crypto-Assets (MiCA) regulations.
MiCA allows digital asset operators a ‘passport’ to offer services across the EU once they’ve secured a license in any member state. Following the withdrawal of its Greek application, Binance declared that it “remains committed to its European users” and would “pursue authorization in another EU Member State. France was rumored to be the company’s preferred second choice.
At the time, Binance expressed confusion over its Greek rejection. But on September 17, the Wall Street Journal reported that Christine Lagarde, president of the European Central Bank (ECB), had “personally intervened to thwart the license application.” According to the Journal’s sources, a Greek official told Binance that Lagarde “wanted to keep the controversial crypto exchange … out of the European Union.”
Lagarde reportedly urged Greek Prime Minister Kyriakos Mitsotakis to inform the HCMC to reject Binance’s application. The HCMC’s vice-chair told Binance that it couldn’t approve the application without the PM’s support. But a spokesperson for Greece’s finance minister told the Journal that the government “had no role whatsoever in [the HCMC’s] assessment of Binance’s application.”
Lagarde’s fingerprints may not have been the only ones on this dagger, as the Journal previously reported that the European Securities and Markets Authority (ESMA) had “privately advised” regulators in other EU member states to block Binance’s applications due to “concerns about the exchange’s compliance with financial-crime rules.”
Lagarde reportedly wanted to prevent Binance from securing MiCA approval while the EU was considering an ECB proposal to assign licensing approval duties to ESMA to minimize “risk migration into the banking system.”
Lagarde reportedly feared that Binance’s EU presence would boost adoption of U.S. dollar-denominated stablecoins rather than their euro-backed counterparts, a trend that some believe threatens the EU’s financial sovereignty. Lagarde was also looking to safeguard the EU’s long-delayed digital euro project, which is still several years away from its official launch.
Following the Journal’s reporting, Binance said only that it “will not comment on speculation” and repeated its commitment to obtaining a license to operate in the EU.
FAQs:
What is Binance’s new deal with Circle?
Binance is investing $100 million in Circle by purchasing nearly 1.24 million Class A shares. The two companies are also extending their partnership for five years, with Binance expanding its efforts to promote Circle’s USDC on its platform, particularly in emerging markets.
How could the Binance-Circle partnership affect Tether?
The expanded agreement will increase Binance’s promotion of Circle’s USDC, especially in emerging markets where Tether’s USDT has already established a strong presence for payments, remittances and preserving value.
Why is Binance facing renewed scrutiny over Iran?
The Manhattan U.S. Attorney’s office is reportedly investigating whether Binance knowingly allowed activity on its platform that violated U.S. sanctions on Iran. The article also details previous reports and investigations involving Iranian-linked transactions and Binance accounts.
What other regulatory issues has Binance faced?
Binance’s regulatory challenges extend beyond Iran. They include questions over its handling of customer information in Russia and the rejection of its application for a MiCA license in Greece. Reports attributed the Greek rejection to concerns over Binance’s compliance with financial-crime rules, while the Greek government denied having a role in the HCMC’s assessment.
Why does Binance’s EU licensing matter?
Under MiCA, a crypto operator can use a license from one EU member state to offer services across the bloc. Binance withdrew its Greek application after it was rejected and said it would seek authorization in another EU member state, while reports suggested France was being considered.
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