The US government has confiscated more than 500 bitcoins belonging to Iranian-held “wallets”, according to a report by Iranian tech news website Techrasa published on July 16.

The targeting of cryptocurrencies by US authorities comes after Iran announced earlier this year it was seriously considering using alternative currencies to circumvent impending US sanctions.

Unofficially, Iranians have been buying crypto in bulk for the past 12 months, to bypass trade sanctions and evade the severe devaluation of the Iranian rial (IRR) amid the intensifying US assault on Iran's economy.

One Iranian trader who has been buying cryptocurrencies for several years told bne IntelliNews: "I have been in a constant tug-o-war with my online trading app [which he did not name] over them shutting me down and holding my coins for months.

"I've lost thousands because of their over-compliance regarding US rules and regulations even before Donald Trump pulled out of the nuclear pact; it's just infuriating, again we're being hit from every side."

According to Sepehr Mohammadi, head of the Iranian Blockchain Community (IBC), over 500 bitcoins owned by Iranian citizens have been seized by the US federal government.

Reports from the US outline claims that the bitcoins were seized due to sanctions violations.

Mohammadi said IBC is negotiating with several lawyers with expertise in anti-money laundering laws to follow up on the seizing of crypto holdings, but to date none had taken on the assignment due to complexities in the use of cryptocurrencies in Iran.

He added that Iran’s cyberpolice had not taken any action since trading in foreign-based cryptocurrencies is currently forbidden.

In April, following a rush in Iranian interest in cryptocurrencies like bitcoin, the Central Bank of Iran (CBI) banned further trading, amid fears people were siphoning millions of euros out of the country via side-door crypto routes.

Iranian central bank governor Valiollah Seif said at the time that the CBI  “would not guarantee investment in bitcoin” following several reports that Iranians were trading, partly given the run on the IRR.

Following the official ban, other Iranian officials openly discussed possibilities of using cryptocurrencies to replace traditional international banking systems like SWIFT and bypass sanctions.

The government and oil ministry looked at taking a page out of Venezuela’s book. It earlier this year launched a cryptocurrency backed by oil and petrochemicals to sidestep sanctions.

However, observers suggest that even if Iran manages to create a new cryptocurrency backed by its oil, and perhaps petrochemicals also, the US will press hard globally to force trading parties not to accept it.