ConsenSys, the Ethereum software powerhouse, removed about 50 Iranian students from its online programming course in a move that highlights the gray areas in sanctions law facing the cryptocurrency industry.
The students were notified on Nov. 13 in an email from ConsenSys Academy, an educational branch of the Brooklyn, N.Y.-based company. While they already finished most of their coursework, the suspension means students won’t receive certificates of completion.
“We are saddened to have to tell you that, effective immediately, we are suspending your enrollment in ConsenSys Academy and your access to the platform,” read the email, which two students separately shared with CoinDesk. It was sent at 1:30 a.m. local time in Iran. “A recent review of our records shows that you indicated that you are located in a country that we are prohibited from providing goods or services to under U.S. law.”
+ سحرخیز باش تا کامروا شی
– ایمیلی که موقع سحرخیزیت میگیری: pic.twitter.com/DZbBtYRbjE
— Mojtaba (@mjtbkh) November 13, 2021
The move represents an abrupt turnabout for ConsenSys, which had offered the $985 course to Iranian students for free and in the past talked openly about its scholarships for Iranian women.
It’s unclear what triggered the company’s drastic change of course. Elo Gimenez, ConsenSys’ global public relations lead, would say only: “ConsenSys is committed to building the digital economy of tomorrow and also to complying with U.S. law in all its facets. That commitment is reflected in our terms of service.”
The switch underscores the latent tension between sanctions, a policy tool to isolate rogue regimes, and blockchains, decentralized networks unconstrained by geographic borders. While sending money from the U.S. to Iran is clearly prohibited, simply teaching citizens of a sanctioned country to use censorship-resistant technology is a more ambiguous matter.
The suspensions come two months after Ethereum developer Virgil Griffith pleaded guilty to a conspiracy charge in a sanctions case brought by the U.S. over a speech he gave at a conference in North Korea. Griffith was previously expected to fight the charge in court.
Long-tense relations between the U.S. and Iran were further strained this month after two incidents in the Sea of Oman.
ConsenSys has been raising money over the course of 2021: The VC-backed entity got a fresh $65 million in April and $200 million in November, with mainstream finance heavyweights such as JPMorgan, Mastercard, HSBC and UBS among the investors.
Whatever the reason for ConsenSys Academy’s decision, it left the students, who lost access to the course materials a few weeks before the program’s scheduled ending on Dec. 1, frustrated and bewildered.
“We are not entering a genuinely new world, but we are just witnessing a transition of our old institutional relations, which are the relations of inequality and power, to just new forms and institutions,” one of the students, Salman Sadeghi, a researcher at the College of Dublin in Ireland, wrote in an emotional blog post.
Recent college graduate Mohammad Hosein Ahmadzadeh told CoinDesk that being abruptly cut off from ConsenSys Academy felt like a bitter deja vu: websites like Coursera and GitHub have previously restricted access for users from Iran. (Coursera later restored access.)
“Especially when [Donald] Trump was president, Iranians couldn’t use these sites,” Mohammad added. “We can’t access any education sites with Iranian IP or nationality.”
When asked whether, as a general matter, sanctions bar U.S. companies from teaching blockchain programming to Iranians, a Treasury Department spokesman said such questions cannot be answered with a simple yes or no.
The Treasury would need to have an extensive discussion with the company to make any kind of assessment, said the spokesperson, declining to comment further.
Sanctions experts interviewed by CoinDesk gave differing opinions on the risk of violating sanctions for U.S. companies that provide education to Iranians and the potential severity of any penalties.
While education is normally not subject to the sanctions the U.S. imposed on Iran, there are some intricate caveats, said Benjamin Hutten, counsel at the law firm Buckley LLP.
For example, it’s only legal to provide learning materials that are a complete product, available in full from the start. This means that “it would probably be permitted to export books, pre-recorded courses or lectures,” but not teach a live lecture, for example, via Zoom, because it “would not be fully in existence at the time of the sale,” Hutten said. (ConsenSys Academy’s course included live content, according to a person familiar with the program.)
It’s easier with traditional learning formats, when to study with an American teacher one needs to go through the emigration process and effectively get approved as a foreign student by the U.S., Hutten said. Accredited academic institutions, like universities, can provide remote courses to Iranian students if those students previously had a U.S. student visa and the coursework was part of regular degree studies, Hutten said.
“If a company can keep [its] crypto educational activities within the above constraints, there should be relatively low risk in doing so,” he said. If not, the consequences can be either a significant monetary penalty or even criminal charges for a willful violation, Hutten said.
Given the exemption under sanctions law for informational materials, the Treasury’s Office of Foreign Assets Control (OFAC) “has not been in the habit of publicly penalizing companies providing education or educational materials to Iran, and it certainly has not imposed severe penalties in this sphere,” Hutten said.
However, the agency “has discretion to make the penalty fit the circumstances, and thus to the extent that the information or education could be or is used to violate or evade sanctions, the penalties could be more severe.”
Daniel Tannebaum, a former OFAC officer and partner at the Oliver Wyman consulting firm, told CoinDesk that the language of sanctions laws can be confusing to people who don’t regularly deal with them, and “confusion about potential non-compliance can force businesses to abandon what could potentially be lawful activities.”
Although the case of Virgil Griffith apparently scared people in the industry, Tannebaum said he believes that spreading knowledge about blockchain technology and digital assets is not damaging, but helping what the U.S. is trying to achieve in Iran.
“Blockchain and digital assets may benefit the government of Iran, but they also benefit the Iranian population in breaking out of their existing banking system as they try to look for more freedom, assuming broader sanctions relief,” Tannebaum said. “That being said, the sanctions are still heavily in effect. So if you find that you’re dealing with someone who is physically located in Iran, that is a sanctions-related risk.”
The safest way to proceed for a company would be to reach out to OFAC and ask for specific guidance, “but you might not get a specific answer,” Tannebaum said.
According to Amber Scott, founder and CEO of Canadian consulting firm Outlier Solutions, the risks for American companies providing services to countries under U.S. sanctions are quite real.
“The U.S. has a stricter sanctions regime than other countries, as well as more severe consequences for violation,” Scott told CoinDesk. “It’s correct for institutions to take a cautious approach.”
When it comes to technology, even giving people knowledge about circumventing the sanctions regime, which cryptocurrencies can do, can be considered a violation, Scott said. The case of Virgil Griffith definitely made the blockchain community in the U.S. stop and reconsider their approach to interaction with sanctioned jurisdictions, she added.
Hope still lingers
Earlier this year, ConsenSys Academy’s team seemed excited about educating Iranians, who often find themselves excluded from the global IT market. Last year, a group of seven Iranian women got a chance to study Solidity, a programming language for Ethereum smart contracts, for free thanks to ConsenSys Academy grants.
The project was put together with the help of a local crypto association CoinIran. It was meant as “a diplomatic mission to give this opportunity to folks who need it,” as Coogan Brennan, then head of developer relations and now director of ConsenSys Academy, told CoinDesk in February.
This year, the program was expanded so that 50 students from Iran were enrolled in September. Since then they all but finished the course and had been working on their final projects when the news came of their suspensions.
Thessy Mehrain, a ConsenSys alumna and one of the creators of the program for Iranian students, said that Iran has a lot of tech talent, and people with coding skills should be able to contribute to development of Web 3 – a future decentralized internet – regardless of where they are geographically.
“Those are the same people who can work on a world that works better for everyone, because we build technology that helps to collaborate, build reliable reputation and verify transactions,” Mehrain wrote to CoinDesk in a Twitter direct message.
For Iranians, crypto provides a way to find jobs and earn money outside the country.
“Because of sanctions, in Iran we can’t buy things, transfer money, participate in classes or have a bank account outside of Iran, and I think blockchain can help us to solve part of this injustice,” said Ahmadzadeh, the recent graduate.
Some of the students are still hoping the situation can be resolved. As a temporary fix, students who live in other countries and did not choose Iran as their country during registration still can access the course, course participants interviewed by CoinDesk said. They are sharing the content with others so that people can finish their work, said one of the students, Navid Hosseini, who works as a developer at a crypto exchange he wouldn’t name.
However, it won’t help students get official certificates from ConsenSys, which could provide “a springboard” for Iranian blockchain coders, Hosseini said.
“I have known ConsenSys for many years for their products like MetaMask and Infura and I have known that they are one of the leading companies in the blockchain sector,” he said. “So, attending and passing this course was crucial for me and many other students that I know.”
Reza Ghasemi, a cryptography professor at Bu-Ali Sina University in Iran, wanted to learn smart contracts coding so he could pass that knowledge on to his students, he said. That, in turn, would give them better career opportunities.
In the end, Iranians are still enrolling in PhD programs abroad, he added, and he himself has been working on academic projects with colleagues in Canada and Turkey – although he doesn’t want to publicly name the academic institutions so as not to cause problems for them.
He added he still hopes that the program’s mentors, which are the previous year’s students, can negotiate some solution with ConsenSys so that this year’s students finish their projects and get their certificates.
Ghasemi said he believes the company gave in to pressure from overly cautious lawyers.
“I believe that ConsenSys doesn’t like to do that, to ban us,” he said.
UPDATE (Nov, 26, 16:00 UTC): Replaces quote from Treasury spokesperson with paraphrase; adds details about Coursera, JPMorgan.
Source: Coin Desk