A Dubai-based illegal gambling network described as one of the world's largest has been channeling millions of dollars in cryptocurrency through Shelbit, an unlicensed crypto exchange that U.S. and independent investigators say sits at the heart of a $4 billion Iranian sanctions-evasion operation, Reuters reported on Friday.

The case underscores how cryptocurrency, designed to move value across borders without traditional banking intermediaries, has become a critical tool for sanctioned states seeking to bypass the U.S.-led financial system. Dubai, which launched its Virtual Assets Regulatory Authority (VARA) in 2022 to oversee crypto activity, has emerged as a major hub for digital asset businesses — but unlicensed operators like Shelbit illustrate the regulatory gaps that persist even in jurisdictions building formal crypto frameworks.

The gambling network, which operates more than 2,000 platforms, is a major customer of Shelbit. Run by Iranian expatriate Siavash Kayvanpour, Shelbit serves as the hub through which the gambling network, Iran's central bank, and other sanctioned Iranian entities gain access to global cryptocurrency markets, according to the report.

The Central Bank of Iran has been sanctioned under U.S. counterterrorism authorities since 2019 over its support for the Islamic Revolutionary Guard Corps (IRGC), its Quds Force, and Hezbollah.

Movement of Funds Through Major Exchanges

Shelbit has moved hundreds of millions of dollars to some of the most prominent crypto companies, including Binance, the world's largest exchange, Reuters reported. Binance stated that Shelbit had never held an account on its platform and that transactions linked to Shelbit were not considered high risk. The exchange added that it investigated users associated with Shelbit, froze relevant accounts, and reported them to law enforcement.

The flow of funds from an unlicensed exchange to the world's largest crypto platforms highlights a persistent challenge for the industry: while major exchanges maintain compliance programs, layering through intermediaries can obscure the origins of funds. Blockchain analytics firms such as TRM Labs and Chainalysis have documented how illicit actors use nested services — smaller exchanges or money services that operate under the accounts of larger platforms — to move proceeds through the regulated crypto ecosystem.

Shelbit also interacts directly with Iran's central bank, wallets linked to the IRGC by the Israeli government, and Nobitex, an Iranian exchange sanctioned by the U.S. government earlier this year following a Reuters investigation that revealed its ties to the Iranian government. Some of the cryptocurrency flowing to Shelbit originated from what two investigative firms described as an Iranian bitcoin mining operation that produces new digital coins. Iran has been a significant bitcoin mining hub, leveraging its energy resources to generate cryptocurrency that can be sold on global markets — a pathway that circumvents conventional financial restrictions.

Scale of the Operation

"This is by far the biggest Iranian illegal gambling network ever discovered and one of the biggest in the world," said John Wojcik, a former researcher at Infoblox who now serves as senior analyst at TRM Labs. Wojcik spent seven years investigating illegal gambling for the United Nations Office on Drugs and Crime.

The network ranks among the largest Iranian sanctions-evasion operations uncovered since 2016, when the U.S. dismantled a roughly $20 billion IRGC gold-for-oil scheme based in Turkey. Separately, the U.S. seized approximately $1 billion in cryptocurrency from Iran in May as part of an expanding pressure campaign.

"It's an IRGC operation, and that's plain as day," said Rich Sanders, an independent blockchain researcher and investigator focused on Iran, referring to Shelbit.

IRGC Connection

The IRGC, founded in 1979, is Iran's most powerful military, political, and economic institution, answering directly to the country's supreme leader, Mojtaba Hosseini Khamenei. U.S. and independent investigators say the Shelbit operation appears closely tied to the IRGC, though Reuters noted it could not confirm whether the IRGC directly controls Shelbit or the gambling network. The disclosure adds to a growing body of U.S. enforcement actions targeting Iranian crypto-based sanctions evasion, including sanctions against Nobitex and multiple seizure actions in recent years, signaling sustained pressure on the financial networks that sustain Tehran's access to global markets.