TEHERAN/WASHINGTON — Iran has moved five US prisoners from jail to house arrest, officials and family members said on Thursday, in the first step of a delicate deal that would unfreeze billions of dollars in Iranian funds and allow the prisoners to leave the Islamic republic.

The progress on the prisoners — one of them detained for nearly eight years — came after quiet, exhaustive diplomacy between the longtime adversaries, whose separate talks on restoring a nuclear deal broke down.

Sources familiar with the negotiations said the next step would be the transfer of $6 billion in Iranian oil revenue frozen in South Korea to a special account in Qatar, which Iran could access only for humanitarian purchases such as food and medicine, Agence France-Presse reported.

Iran described the deal as a prisoner swap, with the state-run IRNA News Agency quoting Teheran's mission to the United Nations as saying that each country will be "granting amnesty and releasing five prisoners".

If all goes as planned, the US prisoners could leave Iran sometime in September, one source said on condition of anonymity.

Meanwhile, Iran's Foreign Ministry confirmed on Thursday that South Korean banks are unfreezing Iran's assets, and a number of "illegally" jailed Iranians in the United States will be soon released.

Unfreezing funds

At the center of discussions has been the unblocking of the $6 billion that Iran earned selling oil to South Korea.

Seoul blocked the funds to comply with US sanctions imposed under then-president Donald Trump that hit the Iranian economy hard.

While stressing that the arrangement was not final, sources said the funds would be converted from won to euros and administered by Qatar, which played a key mediatory role. No funds would be transferred directly to Iran.

US Secretary of State Antony Blinken made it clear that the money already belonged to Iran and added: "Iran will not be receiving any sanctions relief. Iran's own funds would be used and transferred to restricted accounts such that the money can only be used for humanitarian purposes."

Iranian state media said the prisoners would only be released once the money was deposited.

Former US president Barack Obama faced heated criticism from his Republican opponents for sending $400 million in cash — also funds belonging to Iran — as he secured the release of a previous batch of prisoners, while concluding a landmark nuclear accord with Teheran in 2015.

Republicans quickly assailed President Joe Biden for the latest deal, saying it would ease budgetary pressure on Iran.

The US has repeatedly negotiated with adversaries to free US prisoners, whose plights can draw wide public attention. The Biden administration has brokered prisoner swaps with Russia despite refusing most high-level contact with Moscow since the start of the conflict in Ukraine.