Ali Reza Karimi said on Monday that his managers told him a minute before the end of the Sunday round of the U-23 World Championship in Poland to throw the match.
In footage posted online, Karimi appears to be in the lead in his bout against Russia’s Alikhan Zabrailov, but then appears to abandon the fight completely and allows himself to be beaten easily.
The Iranian government praised Karimi for his "noble and heroic action" which they described as a source of pride.
"Your noble and heroic action in the world competition in Poland, abandoning the medal and the podium in support of the highest human values, is a source of pride and praise," reads a statement released by the Iranian sport ministry.
The hashtag #YouMustLose was trending in Iran last night, with some praising his stance and others critical of the Iranian authorities.
Reformist MP Mahmud Sadeghi tweeted: It is not difficult not to face an opponent so you do not recognise the false identity of his government, but what is difficult is to be forced into weakness and forced to defeat a rival.
One twitter user tweeted: If he decides to fight in the colours of another country, no one can say he sold out his homeland.
Others questioned why the Iranian government continued to use the Palestinian cause to further their own standing:
Iran considers Israel an enemy state, and athletes traditionally refrain from competing against Israelis.