Key Takeaways
- Sanctions have long existed among banks and countries; a way of cautioning countries and individuals from going out of line has been enabled by blockchain.
- The blockchain space remains a human innovation to bridge the gap between payments and cross-border transactions, but has come under exploitation by illicit activities sponsored by states.
- Russia, Iran, and North Korea, over the years, have exposed themselves to the use of blockchain despite coming under huge sanctions.
Sanctions have remained a tool used by banks and governments in other countries, which has opened the door to many traditional illicit activities in finance. An act perpetrated on a small scale is gradually becoming a tool for many countries to launder money on the blockchain under the guise of sanctions.
Countries and organisations have upgraded their activities to on-chain and cross-border money laundering, all on the blockchain. 2025 data from Chainlysis shows that the blockchain recorded over $154 billion in transactions using fraudulent wallet addresses, a 162% rise from 2024, with sanctions on organisations and countries as a major driver of these activities.
Source – On-chain activities from Chainlysis
The data above shows blockchain-related illicit activities from 2020, as activities under the guise of sanctions continue to increase, with money laundering, scams, stolen funds, and terrorist financing still dominating the data.
While such activities are present on the blockchain, it remains one of the most fascinating technologies, providing endless access to many individuals, businesses, and organisations, and enabling cross-border payments within a few minutes.
Despite being an innovative tool for the internet world, the blockchain is still used by states for illicit objectives such as trade settlement, reserve diversification, procurement of dual-use goods, ransomware enablement, cyber operations, and financial innovation.
This article discusses some of the activities carried out on the blockchain by states under the veil of sanctions placed on the state or organisations.
$2 Billion in Procurement from DPRK Hacks
Evading sanctions that were once viewed as an experimental activity has grown into a sophisticated, advanced method of laundering money and conducting trades on the blockchain. In 2025, countries such as Russia, North Korea, Iran, and others gained greater exposure to Bitcoin and blockchain technology, as these technologies have provided an easy way to conduct transactions.
North Korea, under the guise of the DPRK Hacks, continues to increase its exposure into the blockchain with over $2 billion claimed to be hacked by DPRK organisations that were used for procurement using different OTC methods on the blockchain.
Iran Exposure and $3 Billion Proxy on Blockchain
Iran continues to expose itself to blockchain and Bitcoin activities, building strategic priorities and financing proxies following multiple bans or sanctions. In 2024, IRGC-linked addresses were spotted moving over $3 billion on the blockchain to support militia activities, oil sales, and procurement of dual-use equipment.
The exposure of Iran since 2024 has increased to over $7.8 billion and continues to surge.
Despite the illicit activities on state-sponsored blockchains, the blockchain remains a powerful tool for many businesses and individuals seeking seamless transactions.
Final Thoughts
Beyond the immediate crypto market reaction to the conflict, a key objective of this state-sponsored financial activity remains the sustained support for external operations. Most of these funds are used to finance a web of regional militia proxies, including Lebanese Hezbollah, Hamas, and the Houthis, facilitating the movement of commodities, illicit oil, and arms at scales not seen on the blockchain before.
FAQs
Is crypto traceable by the government?
The blockchain has been designed for transparency, enabling individuals and governments to access all transactions using the wallet addresses of the parties involved, making activities traceable.
How does the government seize crypto?
Crypto assets can only be confiscated if the party involved is involved in fraudulent activities or money laundering. The government can request a centralised exchange to freeze the account if there is sufficient evidence, but if the activities are on a decentralised platform, it becomes more difficult.
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