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Iranian General Pushes for Crypto Use to Evade US Sanctions and After Being Blacklisted by the FATF

Saeed Muhammad, a commander of the Islamic Revolutionary Guard Corps’ “Army of Guardians of the Islamic Revolution,” called for Iran to use cryptocurrencies to bypass sanctions imposed on his country by the United States.

The sanctions imposed by the Trump administration and the withdrawal of the US from the Joint Comprehensive Plan of Action in 2018 led to the decrease of the value of Iran’s currency. Sanctions have had an effect on foreign trade and investment in the country; ever since cryptocurrencies have gained popularity in evading sanctions. The economic sanctions imposed by the US have shrunk the Iranian economy by 10 to 20 percent.

Iran added to the FATF blacklist

The intergovernmental organization, the Financial Action Task Force (FATF) recently added Iran to a blacklist of countries that have failed to comply with anti-terrorism financing requirements. Iran was added to the blacklist after more than three years of warnings from the FATF to comply with the requirements. Iran would be looking at tougher external auditing of financing firms and even more scrutiny of transactions with Iran.

Calling for the use of cryptocurrencies

According to Iranian crypto news organization Coinit.ir, Mohammad addressed a crowd on Feb. 26, “We are demanding the creation of a more sophisticated mechanism to bypass sanctions. To circumvent sanctions, we must develop solutions such as the exchange of products and the use of cryptocurrencies with our partnerships [in other countries].”

Iran’s development with crypto and blockchain

With the value of the country’s currency dropping and sanctions imposed, Iranian President Hassan Rouhani’s administration announced the idea of launching a national cryptocurrency in 2018. Since then, Iran’s Ministry of Industries, Mining and Trade have issued more than 1,000 cryptocurrency mining licenses to local operators.

The national government also has been working with blockchain startups to improve its financial infrastructure. The central government has been seen providing funding for one company, some private banks have been backing a few projects as well.

Japan Freezes Assets Linked to Hamas Funding

On October 31, the Japanese government announced the freezing of assets belonging to nine individuals and one cryptocurrency trading company accused of financially aiding the Palestinian militant group Hamas, as per Kyodo News. This action comes amidst an ongoing conflict between Israel and Hamas, with other nations like the United States taking similar steps to curb the financial streams that fuel Hamas’s activities.

The Japanese government’s decision targets entities purportedly involved in the financial support of Hamas, which is engaged in rocket attacks against Israel. Hirokazu Matsuno, Japan’s Defence Minister, during a press briefing, emphasized on continued evaluation of potential sanctions from a counterterrorism financing perspective.

The United States had previously enforced sanctions against individuals and entities associated with Hamas on October 18. The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated ten individuals and entities, extending beyond the Gaza Strip to Sudan, Türkiye, Algeria, and Qatar. This action aimed at dismantling Hamas’s financial network, aligns with the broader international initiative to disrupt terrorist financing.

The involvement of a cryptocurrency trading company in this case sheds light on the growing global concern over digital financial platforms facilitating illicit financial flows, a matter that has been underscored by the US sanctions targeting a Gaza-based virtual currency exchange.

These actions by Japan and the US reflect a growing international consensus to tackle terrorism financing. The measures add a financial dimension to the efforts aimed at curbing militant activities in the Middle East, amidst the continuing conflict between Israel and Hamas.

Baidu's Stock Tumbles Amid Military Testing Rumors of AI Chatbot Ernie

Baidu, a prominent Chinese technology firm, experienced a significant decrease in its stock value following reports of its AI chatbot, Ernie Bot, being tested by a laboratory affiliated with the Chinese military. This situation has raised concerns among investors about potential geopolitical ramifications and the complexities that Chinese AI companies face in balancing innovation with political challenges.

On January 15, 2024, Baidu’s Hong Kong-listed stocks witnessed their largest drop since 2022, falling by 11.5%. The decline was triggered by a South China Morning Post report that the People’s Liberation Army’s Strategic Support Force, which oversees cyberwarfare, had tested Baidu’s AI chatbot for military purposes. The report detailed that the researchers fed Ernie Bot prompts to generate military plans, marking the first public confirmation of the Chinese military using commercial large language models.

Baidu immediately denied any direct involvement with the military, emphasizing that the academic paper highlighted the use of its publicly available APIs, the same as any other user would have access to. The company has not engaged in any tailored services or business collaborations with the authors of the paper or related institutions. This statement was issued to reassure investors and distance the company from the military link allegations.

Despite Baidu’s swift response, the stock market reacted sharply. Investors are apprehensive that any association with the Chinese military could lead Baidu to face U.S. sanctions, similar to the situation with Huawei. The U.S. has been particularly vigilant about military applications of AI and has imposed restrictions on AI-linked chips to Chinese entities, affecting companies like Nvidia, which is a key player in AI development.

Baidu’s AI chatbot Ernie Bot, a counterpart to OpenAI’s ChatGPT, was launched in August 2023 and had amassed over 100 million users by late 2023. This incident underscores the strategic importance of AI in global technology and the political intricacies involved. Baidu, along with other Chinese tech giants like Alibaba and Tencent, is at the forefront of the AI race in China. However, these companies now face the challenge of navigating geopolitical sensitivities and regulatory constraints, especially with the U.S. banning the sale of key AI-linked chips to Chinese entities.

The incident raises several critical questions about the future of AI development in China and the global market. How will Baidu and other Chinese AI firms manage the delicate balance between technological innovation and geopolitical complexities? Will this event have a lasting impact on Baidu’s aspirations to dominate the AI sector in China and globally? As the situation unfolds, these questions remain central to understanding the evolving landscape of AI and its intersection with international politics and market dynamics.