$15.8B in crypto linked to sanctioned entities in 2024

A Chainalysis report indicates that in 2024, sanctioned jurisdictions and entities received $15.8 billion in cryptocurrency, constituting 39% of all illicit crypto transactions.

This activity highlights how cryptocurrency is used to circumvent financial restrictions and preserve wealth in economically challenged regions.

The U.S. Office of Foreign Assets Control (OFAC) has intensified its focus on dismantling the financial infrastructure supporting sanctioned states.

Sanctions-related crypto activity saw a record share from sanctioned jurisdictions versus individual entities, with nearly 60% of the value attributed to jurisdictions by the end of 2024.

Iran's increasing use of cryptocurrency is a significant factor, with Iranian centralised exchanges (CEXs) experiencing a surge in usage and outflows, suggesting capital flight.

Residents in sanctioned areas are turning to cryptocurrency as an alternative financial system, as reported by Chainalysis.

Despite a decrease in the total number of sanctioned entities, their financial footprint remains substantial.

The U.S. sanctions on Russia aimed to curb crypto's use in funding the war against Ukraine, illicit cyber activities, and organised crime.

However, companies such as KB Vostok OOO, a sanctioned Russian unmanned aerial vehicle (UAV) manufacturer, have managed to circumvent these measures.

Chainalysis' on-chain investigation revealed that KB Vostok sold drones with the help of local exchanges.

This counterparty processed almost $40 million in transfers and used multiple deposit addresses at the sanctioned Russian exchange Garantex, which handled over $100 million in cryptocurrency, indicating potential involvement of Russia’s military procurement network.

The report also notes that crypto-mixing services like Tornado Cash (CRYPTO:TORN) pose challenges to sanctions enforcement due to their ability to anonymise transaction sources.

Inflows to Tornado Cash surged by 108% in 2024 compared to the previous year, driven by stolen funds from groups like North Korea's Lazarus Group.

The measurable decline in exchange interactions with Iranian services demonstrates the tangible impact of compliance measures in limiting exposure to sanctioned jurisdictions, according to Chainalysis.

The report highlights the ongoing efforts by sanctioned entities to adapt and utilise cryptocurrency for financial activities, prompting continued scrutiny and enforcement actions.

Illicit cryptocurrency activities worldwide amounted to $40.1 billion or 0.14% of the total global on-chain value.

Stablecoins dominated criminal crypto activity for the third year in a row, accounting for 63% of all illicit transactions.