Illegal gambling network funnels $4B in crypto through unlicensed Dubai exchange

An unlicensed cryptocurrency exchange operating out of Dubai processed at least $4 billion in crypto since May 2024, serving as the financial backbone for a sprawling network of more than 2,000 illegal Iranian gambling websites. The operation represents one of the largest sanctions evasion schemes uncovered since 2016.

The exchange, called Shelbit, didn’t just move money for online casinos. Blockchain investigators traced connections to the Iranian central bank and entities tied to the Islamic Revolutionary Guard Corps (IRGC), turning what might sound like a garden-variety gambling bust into something with far broader geopolitical implications.

How the money moved

A Reuters investigation laid out the mechanics. The gambling network, promoted by Iranian influencers Sasha Sobhani and Pooyan Mokhtari, operated through thousands of illegal betting sites targeting Iranian users. The proceeds flowed through Shelbit, which converted and transferred the crypto to access global financial markets that sanctions are specifically designed to block.

$676 million in crypto transactions were traced directly from Shelbit to Binance, one of the world’s largest exchanges.

Sobhani and Mokhtari, along with associate Siavash Kayvanpour, were convicted in 2023 for illegal gambling activities. But the financial infrastructure they helped build apparently kept humming along well after those convictions.

Over the last decade, the IRGC has reportedly expanded its control over online gambling as part of a broader shift in Iran’s economic undercurrent, integrating these sites into Iran’s payment systems to allow efficient transfer of funds overseas despite international sanctions.

Dubai’s regulatory response

Dubai established the Virtual Assets Regulatory Authority (VARA) specifically to oversee digital asset activities. VARA launched an investigation into Shelbit for money laundering and sanctions violations, which culminated in a cease-and-desist order issued on July 24, 2026. That order followed earlier enforcement actions taken in 2025.

Shelbit had been processing billions since May 2024, and the cease-and-desist didn’t arrive until more than two years later.

What this means for investors

When $676 million can flow from an unlicensed exchange to Binance without being flagged and frozen immediately, it exposes gaps that regulators worldwide will be eager to close. Binance has reportedly taken measures to freeze accounts connected to Shelbit transactions.

Dubai competes with Singapore, Hong Kong, and other hubs for crypto companies and capital. A case this large, with connections to terrorism financing laws and sanctioned entities, could push some institutional players to reconsider where they base operations.

Blockchain analytics firms demonstrated their ability to trace hundreds of millions in flows from Shelbit across the ecosystem, reinforcing that crypto transactions are far more traceable than many bad actors assume.

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