Sanctions Propel Illicit Crypto Activity to New Heights in 2025

As ongoing sanctions against certain nation-states intensified, illicit cryptocurrency activities surged to record levels in 2025. Governments and organizations facing financial restrictions increasingly adopted blockchain networks to circumvent these limitations.

Key Takeaways

Illicit crypto activity linked to sanctioned state actors reached unprecedented heights in 2025.
Stablecoins were the primary method for illicit flows, making up the majority of on-chain volume.
Despite the increase, illicit transactions constituted less than 1% of the total cryptocurrency activity.

A recent crypto crime report published by Chainalysis revealed that illicit crypto addresses received no less than $154 billion in 2025, representing a staggering 162% increase from $59 billion in 2024. The significant rise was primarily attributed to sanctioned entities moving substantial amounts of funds on-chain.

Sanctions Propel Illicit Crypto Activity to New Heights in 2025

Chainalysis Identifies 2025 as a Milestone for Illicit State-Linked Crypto Activities

Chainalysis characterized 2025 as a pivotal year, noting “unprecedented volumes connected to nation-states’ on-chain operations” and identifying it as a new phase in the development of the illicit crypto ecosystem. Analysts highlighted the unique scale and coordination of this activity compared to previous years, showcasing the growing sophistication among those under sanctions.

One of the main contributors was Russia, which faced extensive international sanctions following its invasion of Ukraine. In February 2025, Russia introduced a ruble-backed token named A7A5. Within a year, the token facilitated over $93.3 billion in transactions, underscoring how state-linked crypto efforts increasingly enable the transfer of value outside conventional financial systems.

The escalation of sanctions globally has further pressured sanctioned entities to explore alternative payment methods. The Global Sanctions Inflation Index estimated that as of May, nearly 80,000 entities and individuals were sanctioned worldwide. Additionally, research from the Center for a New American Security indicated that the United States added 3,135 entities to its Specially Designated Nationals and Blocked Persons List in 2024, marking the highest annual total in history.

Stablecoins have emerged as the central vehicle for illicit crypto transactions, reflecting broader trends in the market. According to Chainalysis, stablecoins represented 84% of all illicit transaction volumes in 2025, driven by their price stability, ease of cross-border transfers, and abundant liquidity. The same features that fuel legitimate use have made stablecoins appealing to users under sanctions.

Despite the dramatic rise in illicit activity, Chainalysis emphasized that such transactions still represent a small fraction of the entire crypto economy, accounting for less than 1% of total on-chain activities, although their share has slightly increased year over year.

PeckShield Reports Increase in Address-Poisoning and Key-Leak Exploits

In December, blockchain security firm PeckShield recorded 26 significant exploits, with address-poisoning scams and private-key leaks resulting in considerable financial losses. One incident involved a victim who lost $50 million after mistakenly copying a fraudulent address that closely resembled their intended target.

Another notable case involved a private key leak from a multi-signature wallet, leading to losses of around $27.3 million. The industry's vulnerabilities extend beyond technical threats to include social engineering scams, exemplified by Brooklyn resident Ronald Spektor, who faces charges for allegedly stealing $16 million from approximately 100 Coinbase users by pretending to be an employee of the company.