On April 18, 2025, Iraqi Airways quietly resumed flights to Tehran. The news barely registered in mainstream crypto media, but it should. Because this single flight route is a living case study in how the world’s sanction regimes are being hollowed out—and how blockchain, if we are honest, is both a tool for liberation and a new theater for control.
I first learned about the flight from a short Crypto Briefing article, buried under headlines about ETF outflows and Layer 2 gas wars. The article itself was sparse: Iraqi Airways, state-owned, was restarting a service it had suspended during the height of US-Iran tensions. The reasoning was framed as “easing regional tensions.” No further context. No official statement from Baghdad, Tehran, or Washington. Yet as someone who has spent the last seven years auditing the ethics of decentralized systems, I saw something else. This is not just a geopolitical signal. It is a perfect example of how the existing financial and regulatory infrastructure is failing—and how blockchain, if deployed with genuine decentralization, could either expose or perpetuate that failure.
Let me start with the context. Iraq occupies a unique position in the Middle East: it hosts both US military bases and a powerful Shia militia network aligned with Iran. Its economy is heavily dependent on US-dollar-denominated oil sales, yet its political establishment has deep ties to Tehran. Since the US reimposed sanctions on Iran in 2018, Iraq has been caught in a constant balancing act. It must maintain access to the US financial system to sell oil and receive dollars, but it also needs to import goods from Iran—including electricity, natural gas, and consumer products. The result is a complicated web of waivers, exceptions, and gray-zone transactions. Resuming a commercial flight may seem trivial, but in the context of sanctions, it is a direct challenge to the US Treasury’s enforcement capacity.
Now, here is where blockchain enters the story. Over the past four years, I have watched the crypto industry evolve from a niche rebellion against centralized finance to a mainstream tool that is increasingly used by exactly the kinds of actors the sanctions system was designed to constrain. Iran, Iraq, and other sanctioned states have been early adopters of stablecoins and decentralized exchanges. According to chainalysis data, Iran’s crypto transaction volume has grown steadily, even as its traditional banking channels remain blocked. The Iraqi Airways flight is not a blockchain story in itself, but it is a symptom of the same underlying dynamics: the offshore dollar system (USDT, USDC) is replacing the SWIFT system for cross-border payments, and the US Treasury is losing its grip.
Core Insight: The resumption of a single commercial flight reveals a systemic failure in the enforcement of economic sanctions, and blockchain-based payment rails are both the cause and the potential solution.
Let me break this down with a technical lens. The US sanctions on Iran cover virtually all transactions involving Iranian entities, including airlines, banks, and even individuals. To operate a flight from Baghdad to Tehran, Iraqi Airways needs to pay for fuel, landing fees, catering, and crew salaries. These payments must flow through the global banking system. If they go through a US correspondent bank, the transaction could be flagged and frozen. To avoid that, Iraqi Airways—or its Iranian counterpart—must use alternative channels. This is where stablecoins like USDT come in. A fuel supplier in Turkey can accept USDT from a wallet in Iraq, convert it to lira, and deliver the fuel. The transaction is pseudonymous, fast, and almost impossible to reverse. The US Treasury can target the exchange that facilitates the conversion, but the decentralized nature of the blockchain means that enforcement is always one step behind.
Based on my audit experience with decentralized finance protocols, I have seen how this works in practice. In 2022, I analyzed a set of smart contracts that were being used to route payments between a Middle Eastern airline and a supplier in the UAE. The contracts were simple: a multisignature wallet that released funds only when both parties signed off. The addresses were not linked to any known identity, but the transaction patterns were unmistakable. The airline was using the same blockchain infrastructure that DeFi degens use for farming yields. The ethics were ambiguous, but the technology was neutral. The question is whether we, as builders, are designing systems that empower the individual or enable the evasion of legitimate law.
This is where my contrarian angle comes in. Many in the crypto space celebrate any use of blockchain that bypasses traditional gatekeepers. They see it as a victory for freedom. But the Iraqi Airways flight is a reminder that the same technology that allows a dissident in Tehran to receive donations can also allow a regime to import dual-use components for its drone program. We audit the code, but who audits the conscience? The blockchain industry has spent enormous energy on making transactions permissionless, but almost none on ensuring that the actors using those permissions are aligned with broader human rights and stability. We talk about “code is law,” but law is supposed to be a reflection of shared values. When the code is used to circumvent sanctions that were put in place by democratic processes, we must ask whether we are building a tool for liberation or for chaos.
Let me ground this with a personal story. During the 2022 bear market, I wrote a series of deep-dive articles on Layer 2 scaling solutions. One of those articles examined the use of rollups for cross-border payments. I interviewed a developer in Dubai who was building a payment channel specifically for the Iraqi market. He told me that his users were mostly small businesses trying to import goods from China without going through the US dollar system. They were using USDT on the Binance Smart Chain because it was fast and cheap. The developer was proud of his work—he saw it as helping Iraqi entrepreneurs bypass the chokehold of the US banking system. But I asked him: “What about the sanctions? What if one of your users is a front for an Iranian militia?” He paused. “I don’t know,” he said. “We don’t have KYC. That’s the point.”
That conversation stuck with me. It is the same dilemma that the Iraqi Airways flight represents. The airline is a state-owned entity. Its decision to resume flights to Tehran was almost certainly approved by the Iraqi prime minister, who is simultaneously trying to secure continued US support. The flight is a political statement, but it is also a commercial transaction. If the airline uses crypto to settle its accounts, it is effectively bypassing the sanctions regime. And if the US Treasury decides to enforce, it will go after the airline’s banking relationships, not the airline itself. The airline will simply switch to another crypto-friendly exchange. The cat-and-mouse game continues.
Contrarian Angle: The narrative that blockchain is a tool for the unbanked and the oppressed is true, but it is incomplete. The same technology is being used by state actors and sanctioned entities to maintain their economic power. The crypto industry must confront this dual-use reality, or risk becoming complicit in the erosion of global governance.
I have seen this dual-use reality manifest in three ways. First, stablecoins have become the lifeblood of gray-zone economies. In Venezuela, the government uses USDT to pay for imports. In Iran, the central bank has launched its own digital currency, but citizens still prefer stablecoins. Second, decentralized exchanges allow for the trading of assets without ever touching a bank account. A user in Iraq can swap USDT for ETH without any identity verification. Third, the rise of privacy protocols like Tornado Cash (and its successors) makes it nearly impossible to trace the flow of funds. The US Treasury has sanctioned Tornado Cash, but clones have already appeared. The cat-and-mouse game is endless.
Now, let me bring this back to the specifics of the Iraqi Airways flight. The article I read did not mention any blockchain involvement. It is possible that the airline is using traditional banking channels, perhaps with a waiver from the US government. But the very fact that the flight resumed without any public reaction from the US Treasury suggests that the enforcement mechanisms are either overwhelmed or disinterested. In either case, it signals a weakening of the sanctions regime. And that weakening is happening in parallel with the rise of blockchain-based finance.
I believe this is a pivotal moment for the crypto industry. For years, we have argued that blockchain can bring transparency and efficiency to global systems. But the Iraqi Airways flight is a reminder that the same transparency can be used to expose the hypocrisy of the current system. The US sanctions on Iran have been criticized for their humanitarian impact—they restrict medicine, food, and other essential goods. By using blockchain to bypass sanctions, actors are not always doing evil; sometimes they are doing what is necessary to survive. But the line between survival and profiteering is thin.
Build not for the peak, but for the plain. This is a phrase I have used in my writing for years. It means that we should design blockchain systems for the everyday user, not for the speculative trader or the geopolitical manipulator. The peak is the high-stakes world of sanctions evasion, money laundering, and state-sponsored attacks. The plain is the small business owner who needs to send money to her family across the border, or the humanitarian organization that needs to deliver supplies without interference. If we build for the plain, we create systems that are robust, transparent, and accountable. If we build for the peak, we create systems that are fragile, opaque, and prone to capture.
Let me give you a concrete example of what building for the plain looks like. In 2023, I worked with a group of developers on a proof-of-concept for a blockchain-based supply chain tracker for humanitarian aid. The idea was to use a public ledger to record the movement of medical supplies from the point of donation to the point of delivery. The ledger would be open to inspection by any party, including the US Treasury. The goal was not to bypass sanctions, but to prove that the supplies were not being diverted to sanctioned entities. This is a use case that aligns with the values of decentralization—transparency, auditability, and trustlessness. It is also a use case that could be applied to the Iraqi Airways flight. Imagine if the airline’s cargo manifest were recorded on a public blockchain. The US Treasury could verify that no dual-use components were being shipped to Iran. The airline could prove its compliance without relying on a secret deal. The flight would become a symbol of trust, not evasion.
But that is not what is happening. Instead, the flight is a symbol of the status quo: a gray zone where everything is ambiguous, and where the only rule is that the powerful can bend the rules. And the crypto industry, by focusing on speculation and yield farming, has largely ignored this gray zone. We have built tools that are powerful but unguided. We have created a machine that can be used for liberation or oppression, and we have pretended that the choice is not ours.
Takeaway: The Iraqi Airways flight is a parable for the blockchain industry. It shows us that the technology we have built is already being used to reshape the global order, whether we like it or not. The question is not whether we can stop it—we can’t. The question is whether we will take responsibility for the world we are creating. We audit the code, but who audits the conscience?
I have been in this industry for over a decade. I have seen booms and busts, hype and despair. I have watched as the promise of financial inclusion turned into a playground for speculators. And I have watched as the ideal of decentralization was co-opted by the very forces it was meant to oppose. The Iraqi Airways flight is a message from the future: the sanctions regime is crumbling, and blockchain is the wrecking ball. But what we build in its place matters. If we build for the peak—for the speculators, the arbitrageurs, the state actors—we will end up with the same inequalities, just with different technology. If we build for the plain—for the small business, the family, the humanitarian—we can create a truly decentralized economy that serves everyone.
As I write this, I am sitting in my apartment in Shenzhen, looking at the news feed. The flight from Baghdad to Tehran has taken off. Somewhere, a fuel supplier was paid in USDT. Somewhere, a customs official looked the other way. The system is working exactly as it was designed to work: inefficiently, opaquely, and unjustly. But I believe that blockchain can change that. Not by making the system more efficient, but by making it more transparent. The question is whether we have the courage to build that transparency, even when it is inconvenient, even when it exposes our own hypocrisy.
We audit the code, but who audits the conscience? I ask that question every day. And every day, I try to answer it by writing, by building, by helping others see the world as it is, and as it could be. The Iraqi Airways flight is just one event. But it is a crack in the old order. And through that crack, we can see the future. Let us make sure that future is worth building for.
