The Dollar’s Digital Shadow Demands More Than Seizures -By Fransiscus Nanga Roka

A token can remain pegged to the dollar, even if the system that transports that token has failed all of the tests used to determine if it is accountable.

On September 14th, 2026, U.S. Attorneys Office for the Southern District of New York (SDNY) has filed a civil forfeiture lawsuit against approximately $61 Million worth of cryptocurrency that is believed to have been generated by sanctioned Iranian oil sales. The lawsuit alleges a network of money flows that connect Chinese purchasers, Hong Kong-based businesses, cryptocurrency exchanges and wallets used by Iranian governmental and military organizations, such as the Islamic Revolutionary Guard Corps (IRGC), which is a U.S. designated terrorist organization. However, these are merely allegations that will be determined in court.

More important than the headline number is the alleged mechanism. The prosecutor claims that Blessed Trust Limited and Hexa Whale Trading Limited presented themselves as legitimate financial/commercial entities when they facilitated payments related to oil. “Entity A,” which is described as a wallet network, is said to have received and disbursed over $1.5 billion in proceeds. Additionally, the complaint lists transactions that were processed via US-based correspondent banking accounts.

The relationship between traditional finance and cryptocurrency is an area of concern. Traditional financial institutions (such as corporations, banks, etc.), digital currency exchanges, and digital wallets can combine to form a payment network where every participant only has access to a portion of the overall business.

Superficial compliance occurs when an institution verifies its customer’s incorporation documents but does not know what type of business the customer conducts.

The government should be held to as high a standard of intellectual honesty. A forfeiture complaint is not a judgment. While a connection with Blockchain technology can help establish the fact of the use of such technology, this does not imply that the user had knowledge or intended to commit a crime using it. In part, the complaint was based upon transaction patterns and clustering heuristics which were used to infer that the same person/entity controlled Entity A addresses. These inferences need to be subject to further investigation and corroboration.

The presence of a digital currency exchange on what is being described as a “payment route,” does not indicate guilt. Binance states that this lawsuit has not been directed toward it, and does not claim that the platform committed any wrongdoing. This distinction will be critical if the government attempts to prosecute based on the theory of association.

The more fundamental political question is about control of money. Civil forfeiture allows for taking away the property of suspected illegal operations prior to having obtained a criminal conviction. Since the standard for evidence is lower in civil forfeiture cases than in criminal ones, it is critical that there is an adequate review by the courts. Skadden’s study clearly demonstrates the relationship between the enforcement of sanctions and civil asset forfeiture.

Five reforms should follow.

To begin with, prosecutors need to make the process of identifying who owns what asset (attribution) verifiable on its own. They must show how they traced assets, separate what they saw from what they assumed, and allow for some form of verification of the way they grouped different “wallets.” Also, if the government says that a claim is based on national security, then the government must provide evidence supporting this claim.

Second, exchanges and banks must confirm that a business has an actual presence and is operating as expected based upon its declared business activity. The exchange or bank will need to assess the expected volume of business for a company; who their primary customers/vendors are; what types of commodities they use; and how they typically pay for goods/services. If there are significant differences between these items and what the company claims to be doing then the exchange/bank must investigate further.

Third, the issuers of stablecoins should establish clear rules regarding how they will respond to lawful restraint orders, what process they use to determine if a freeze on funds was made in error, and how long they will maintain their records. When private entities control a medium of exchange (such as stablecoins), there must be transparency in the processes used by those entities.

Fourth, authorities need to work together across different areas of law enforcement (jurisdictions) to protect evidence and focus on the individuals who help facilitate these types of crimes. The general suspicion that someone is from Iran or has ties to the region cannot take the place of an individual’s specific transactions. Also, it is important that legitimate humanitarian trade has a way to operate.

Fifth, enforcement agencies must report each outcome separately: funds held back, forfeitures awarded by court order, successful challenges against claims, and finally distribution of the assets. The freezing of a person’s bank account shows that an action was taken, but it does not prove that justice was served.

If true, the reported scheme will reveal large-scale failures among financial intermediaries. On the other hand, if enforcement is faster than proof, this will demonstrate another type of failure within institutions.

The world needs authorities who can stop illegal financing activity and court systems that can require those authorities to demonstrate how they know it is occurring.

Fransiscus Nanga Roka

Faculty of Law University 17 August 1945 Surabaya and Managing Partner Law Firm Victorious Indonesia