Crypto Outflows from Iran: Capital Escape or Defensive Withdrawal?

Today, many news sites reported that crypto outflows from the Iranian exchange Nobitex surged eightfold after after the United States and Israel launched military operations against Iran. Following Elliptic - whose blog was the first to publish the story - most commentators have interpreted this as evidence that capital is fleeing Iran for foreign destinations.

My first reaction was: what do you mean, "for foreign destinations"?

In my view, withdrawing crypto from a CEX usually means that people have decided to self-custody. That is a perfectly natural instinct. If you use rabbit.io for swaps, I am sure you feel the same way. I have no doubt that users come to us not only for the best rates, but also for the ability to send crypto from their own non-custodial wallet and receive another asset into a wallet they fully control. The ability to store funds securely on your own terms is one of the core features of any cryptocurrency.

So when people rush to withdraw assets from a CEX, that should not automatically be interpreted as money being moved abroad. It can simply mean that users are taking their funds out of an environment where the state might be able to reach them. In wartime, governments may be tempted to lay claim to citizens' assets. Under such circumstances, who would not consider withdrawing?

However, when I reread Elliptic's note more carefully, I noticed this line: "Initial tracing of recent outflows from Nobitex suggests that the funds are being sent to overseas cryptoasset exchanges."

Now that is unexpected.

• On one hand, Elliptic specializes in tracking blockchain transaction flows. They know what they are doing.
• On the other hand, are you aware of many exchanges that allow Iranian citizens to register and trade?

Or is the phrase "initial tracing" deliberately cautious - just in case a deeper investigation later fails to confirm the early conclusions?

What do you think - do you trust Elliptic's assessment?