Decentralization's Failed Promise in Iran

In the middle of a volatile cryptocurrency market, you might not care that Iranians have greater financial problems than citizens of the privileged world. For years, there have been considerable bans on Iranian nationals' activity – from access prohibition to the blocking of users and assets – on various crypto platforms.

Mahzad Elyassi is a journalist, writer and anthropologist from Iran.

Crypto exchanges such as Coinbase, Kraken, LocalBitcoins and the Blockchain.com website have restricted access to their platforms for all Iranian users. Crypto exchange platform Bittrex froze millions of dollars of Iranian users' crypto funds from 2017 to 2019 without any prior warning or explanation.

In a similar move, NFT (non-fungible token) marketplace OpenSea removed Iranians from its platform overnight in March 2022. There is no direct financial exchange on OpenSea, and yet not only have the NFT assets of Iranian artists and creators vanished, but also Iranian art buyers have lost their property without any warning.

Meysam is one of the creators who has lost his NFTs on this platform:

One day, I realized all the meta data of my accounts on OpenSea is gone. The transactions were still available on blockchain but the data for the buyers also disappeared. I had another account that had no transaction but the NFTs were gone on that account too. It was a shocking experience for me and the others. Iranian NFT community is so active and successful but even the collectors are now cautious about buying NFT from Iranian artists

Against the ethos of decentralized finance (DeFi), decentralized exchanges such as ShapeShift and IDEX have banned Iranians from their platforms. The Uniswap front end has excluded Iran from the website, but the protocol itself – based on smart contracts hosted on the Ethereum blockchain – is still accessible to Iranians. The Uniswap ban was apparently discovered via a change on a code posted on GitHub, not by an official announcement on the website.

This is not just about crypto exchanges or NFT platforms. ConsenSys, the Ethereum software powerhouse, suspended the enrollment of 50 Iranian students in the middle of its online course, and Gitcoin, a crowdfunding platform, discontinued a campaign funded by grants aimed at helping Farsi-speaking women students (including women from Afghanistan) learn Ethereum coding.

This is what Salman Sadeghi, one of the Iranian students who received the scholarship from ConsenSys, wrote about the incident:

It seems so disappointing to me, not because some young talented students would not be able to learn how to be the new world developers, you know that there are always alternative solutions, but because it with itself unfolds the underlying truth of our current transition to the so-called decentralized world, a world which surprisingly ConsenSys itself is a designer of

Iranians overseas

Iranian residents of Europe and the U.S. haven’t been exempt from such policies. Binance customer service allegedly mentioned that Iranians “by blood” were banned from the platform regardless of their place of residence. This could be a mere language mistake by a non-English-speaking employee, and yet no formal apology or explanation ever followed this shocking statement.

U.S. regulators' requirements come from the sanctions imposed by the U.S. government following its withdrawal from the Joint Comprehensive Plan of Action (commonly known as the “Iran deal”), which is supposed to target the assets and activities of Iran’s government as part of the Office of Foreign Assets Control’s sanctioned nations.

In practice, however, the restrictions have barely affected the regime’s agenda. Western countries have been insensitive to the fact that the closed crypto accounts belong to real human beings with hopes and dreams. It is easy to dehumanize people who are under sanctions, but some lives have been seriously affected by the bans.

Money lost

“It's more than four months and my Bittrex enhanced account is disabled. They don't give me the right answer. I got a loan from the bank and invest in coins in Bittrex but they don't give back my money. I am losing my money and my house because of Bittrex,” said a 2018 tweet with the hashtag #bittrex_disabled_accounts from a user desperately trying to voice his loss.

There are similar kinds of messages on different forums, and it is unclear what has happened to the cryptocurrencies involved. But Reza Lotfian, a user I interviewed for this article, said he got his money back from Bittrex with a huge loss due to the timing of withdrawal.

Additionally, the scams have been growing in Iran’s crypto market thanks to the black market revolving around third parties claiming to be experts in bypassing sanctions by creating fake IDs. Surely, there would be those who are rightfully targeted by sanctions among the users, but indiscriminately targeting a country's whole population is comparable to bombing a wedding to kill a couple of terrorists lurking among the attendants.

They are doomed to wrestle with restrictive internet filtering policies and geo-blockades of blind obedience to international sanctions

I am working in Tehran in a shared space consisting of more than 600 startups, mostly staffed by a younger generation of educated people who are trying to think and work globally. Nevertheless, they are doomed to wrestle simultaneously with the restrictive internet-filtering policies imposed by their government and geo-blockades of blind obedience to international sanctions.

These talented people have been excluded from the news headlines and removed from international consideration. We are simply trapped in the political conflicts of governments. Banning all the users of a country not only blocks accounts but also wipes out a nation, culture and engagement – in a nutshell, freedom of expression.

The 1996 manifesto “A Declaration of the Independence of Cyberspace" written by John Perry Barlow now sounds more like a fantastical utopia than ever before. We can repeat that the five pillars of blockchain tech are open, public, borderless, neutral and censorship-resistant, but while the exchange platforms are still abiding by fiat institutes’ monetary rules, it is dishonest to call bitcoin decentralized money for exchange.

Far from utopia

We are far away from the distributed ledger technology utopia once portrayed by enthusiastic users of blockchain forums. There is no genuine Bitcoin “community” as long as a part of the community shrugs off another part. It is hypocritical to pretend to function as an open-community decentralized platform while using the trend as an attraction, and then discarding the idea after reaching a considerable capital virtue that is required to be “regulated.”

Since we have accepted the surveillance of governments out of terrorism fears (which are usually created by those very governments), no wonder the dominance will grow increasingly stringent even for U.S. citizens and others dwelling in the “free” world.

Now that people from Iran, Venezuela and Cuba are barred from the community, tomorrow the community might shrink to even fewer “acceptable” users, cutting off crypto's nose to spite its face.

Banning all the users of a country wipes out a nation, culture, engagement, and in a nutshell, freedom of expression

Iran’s economy is imploding under unprecedented sanctions. Inflation rates are hammering the middle class, which represent the main defenders of values such as freedom and democracy. But some people are concerned about peace and freedom, no matter from which country or nation citizens come. These people need to recognize one another and establish a dialogue.

As activists, we know that dehumanization begets aggression, discrimination and violence. The case of GitHub proves that geo-bans shouldn't be taken for granted – whereas defending the rights of all users will result in the free flow of information. Sanctions need more-efficient bureaucratic procedures, but the easier way, unfortunately, is to eliminate all people of a country rather than incur the cost.

As internet activists and believers in decentralized core principles, we should emphasize finding a solution to the prior presumption of innocence, not vice versa. We should react and protest against the irresponsible behavior of regulators who are supposed to provide services for cryptocurrencies. What we are doing right now will shape the future of cyber rights.