In 2024, economic sanctions targeting Russia and Iran reshaped the landscape of illicit cryptocurrency transactions, as both countries increasingly turned to digital assets to navigate financial restrictions, according to a report shared by Chainalysis. 

The United States Treasury’s Office of Foreign Assets Control (OFAC) intensified its efforts to dismantle the financial infrastructure of sanctioned states, moving beyond traditional banking to target cryptocurrency transactions that fund state-backed activities.

Iran’s growing reliance on cryptocurrency drove a surge in transactions through Iranian centralized exchanges (CEXs), with patterns suggesting capital flight as citizens sought alternative financial options amidst geopolitical instability. 

Meanwhile, Western enforcement agencies ramped up efforts to disrupt Russian-linked crypto networks, leading to significant crackdowns on cybercriminals and military funding channels.‍

Sanctions Target Core Financial Networks

In a strategic shift, OFAC’s crypto-related sanctions in 2024 went beyond targeting individuals and small groups, focusing instead on the financial infrastructure enabling illicit activities. Although the number of new crypto sanctions was slightly lower than in 2023, their impact was significant, as the entities involved had substantial financial footprints.

The increasing use of Executive Order 14024, which targets harmful foreign activities of the Russian government, marked a decisive move by the U.S. and its allies to weaken Russia’s wartime economy. These sanctions primarily focused on financial networks that facilitated sanctions evasion, cybercrime, and military procurement.‍

Crackdowns on Russian Crypto Networks

Western agencies launched a series of major actions against Russian-linked crypto entities, which played key roles in supporting Russia’s war efforts, illicit cyber activities, and organized crime networks.

On August 23, 2024, OFAC sanctioned KB Vostok OOO, a Russian unmanned aerial vehicle (UAV) developer supplying drones to Russian forces in Ukraine. KB Vostok had been soliciting cryptocurrency donations and appeared to facilitate UAV sales through crypto transactions. On-chain analysis revealed that one counterparty accounted for 16 of 24 transactions with the sanctioned address, transferring nearly $40 million through Garantex, a sanctioned Russian exchange that processed over $100 million in cryptocurrency.

A month later, on September 19, 2024, Germany’s Federal Criminal Police (BKA) seized 47 Russian-language no-KYC crypto exchanges in Operation Final Exchange. These platforms, which lacked Know Your Customer (KYC) protocols, were exploited for ransomware payments, darknet transactions, and sanctions evasion. Many of the targeted platforms were deeply integrated into the cybercrime ecosystem, with illicit inflows from stolen funds, darknet markets, and sanctioned entities.

On September 26, 2024, OFAC sanctioned Russia-based crypto exchange Cryptex and its operator, Sergey Sergeevich Ivanov, for laundering funds linked to fraud shops, ransomware, and darknet markets. Cryptex processed over $5.88 billion in transactions since 2018, acting as a financial intermediary for cybercriminals. Concurrently, FinCEN labeled another Russian no-KYC exchange, PM2BTC, as a primary money laundering concern under the Combating Russian Money Laundering Act. U.S. and Dutch law enforcement seized related domains and infrastructure, while the U.S. State Department issued a $10 million reward for information leading to Ivanov’s arrest.

In another major action, Operation Destabilise on December 4, 2024, dismantled a Russian money laundering network responsible for moving billions in illicit funds. Led by the UK’s National Crime Agency (NCA), the crackdown resulted in 84 arrests and the seizure of over €20 million in cash and cryptocurrency. Networks like Smart and TGR laundered funds for Russian elites, cybercriminals, and organized crime syndicates. The operation was an internationally coordinated effort involving OFAC, the DEA, and the FBI.‍

Iran’s Cryptocurrency Boom Amid Economic Turmoil

While Russia faced financial crackdowns, Iran’s use of cryptocurrency surged in 2024, driven by rising distrust in the government and economic instability. Iranian exchanges saw outflows of $4.18 billion, up nearly 70% from the previous year. The Iranian rial (IRR) plummeted, exacerbating economic uncertainty and prompting more individuals to use cryptocurrency as a hedge against inflation and financial controls.

Iran’s government demonstrated its ability to control financial outflows when, in December 2024, authorities abruptly halted withdrawals from Iranian exchanges following a record decline in the rial’s value. This move reflected the government’s ongoing efforts to prevent capital flight as inflation hovered between 40-50%. Since the U.S. withdrew from the Joint Comprehensive Plan of Action (JCPOA) in 2018, the rial has lost approximately 90% of its value.

The increase in cryptocurrency transactions also appeared to correlate with geopolitical flashpoints. On-chain analysis found that bitcoin outflows from Iranian exchanges spiked on April 9th and 14th, 2024—dates closely aligned with heightened military tensions in the region.‍

The Continued Challenge of Sanctions Enforcement

Despite enforcement actions against Russian and Iranian crypto networks, no-KYC exchanges continue to operate, often rebranding under new names after crackdowns. While the number of active no-KYC exchanges has increased, overall inflows have declined, reflecting the disruptive impact of sanctions.

Meanwhile, decentralized platforms pose unique enforcement challenges. Crypto mixer Tornado Cash, sanctioned by OFAC in 2022 for laundering over $455 million in stolen funds linked to North Korea’s Lazarus Group, remains active. In 2024, inflows surged 108% compared to the previous year, driven largely by stolen funds, which accounted for 24.4% of total transactions.

A U.S. court ruling on November 26, 2024, determined that OFAC had exceeded its authority in sanctioning Tornado Cash’s smart contract addresses, raising broader questions about enforcement limitations in decentralized finance (DeFi).

As sanctioned nations adapt to a crypto-driven financial landscape, blockchain intelligence tools are increasingly being used to track illicit transactions and mitigate exposure to restricted jurisdictions. Exchanges have a growing responsibility to prevent financial interactions with sanctioned entities, and on-chain analysis shows that exchange exposure to Iranian services declined by 23% between 2022 and 2024.

With Iran deepening economic and military ties with Russia, a country with the world’s most targeted sanctions, financial risks for global entities remain high. In February 2025, the U.S. introduced National Security Presidential Memorandum (NSPM-2), which reinstated the maximum pressure campaign on Iran. The directive mandates aggressive enforcement against Iranian-linked financial networks, impounding illicit oil shipments, and prosecuting leaders of Iranian-backed terrorist organizations.