Sanctioned Entities Drove $16 Billion in Cryptocurrency Activity in 2024

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Sanctioned entities and jurisdictions played a major role in cryptocurrency transactions last year, contributing to nearly $16 billion in activity, according to a new report. The surge was partially fueled by the resurgence of Tornado Cash, a notorious mixing service, and a significant increase in cryptocurrency use within Iran.

Tornado Cash: A Persistent Challenge

Despite being sanctioned by the U.S. Treasury’s Office of Foreign Assets Control (OFAC) in 2022, Tornado Cash remains operational, with its core infrastructure proving difficult to dismantle. According to blockchain analytics firm Chainalysis, inflows to the platform more than doubled in 2024 compared to the previous year, despite global enforcement efforts.

The platform, which mixes and obfuscates funds, remains a hub for illicit financial activity, allowing cybercriminals to launder digital assets and evade law enforcement tracking. While its founders argue that it provides a legitimate privacy function, the platform has been a key tool for hackers and criminal organizations.

Criminal Activity & North Korean Involvement

In 2024 alone, nearly a quarter of all funds flowing into Tornado Cash were identified as stolen funds, including $145 million in Ethereum allegedly stolen from the Heco Chain blockchain protocol by North Korean hackers.

The U.S. has aggressively targeted crypto-related financial crime, issuing 13 new sanctions designations in 2024 that included cryptocurrency addresses, the second-highest number of such sanctions in the past seven years. However, enforcement actions have not been enough to fully dismantle Tornado Cash or similar decentralized finance (DeFi) networks that operate outside traditional regulatory frameworks.

Iran’s Shift to Cryptocurrency Amid Sanctions

Sanctions imposed on Iran’s economy have led to a dramatic increase in cryptocurrency usage, as citizens and businesses seek to bypass financial restrictions. In 2024, crypto outflows from Iran skyrocketed to $4.18 billion, reflecting a 70% year-over-year increase.

This shift is largely attributed to:

The collapse of Iran’s currency, the rial, which has lost 90% of its value since 2018
Ongoing regional instability, including tensions with Israel
Financial sanctions blocking access to Western banking systems

Crypto as an “Alternative Financial System”

For many Iranians, cryptocurrency represents a way to safeguard wealth and move funds beyond government control. While some state-sponsored actors have been known to exploit crypto for sanctions evasion, the majority of transactions appear to be driven by individual users escaping financial uncertainty.

However, the number of crypto exchanges willing to do business with Iranian services has steadily declined, falling 23% since 2022 to just over 200 active exchanges. Regulators continue tightening restrictions, making it increasingly difficult for Iranians to access global crypto markets.

Global Cryptocurrency Market in 2024

Despite the growing role of cryptocurrency in sanctioned jurisdictions, overall illicit crypto transactions declined in 2024.

According to blockchain intelligence firm TRM Labs:

The total volume of global cryptocurrency transactions surged to $10.6 trillion, a 56% increase from 2023
Illicit crypto trading volume fell to $45 billion, a 24% decrease from 2023
Illicit transactions accounted for just 0.4% of total crypto activity, down from 0.9% in 2023

While regulators continue cracking down on crypto’s role in money laundering and illicit finance, the industry’s growth has outpaced illegal use, suggesting that legitimate adoption is increasing worldwide.

The Future of Crypto Sanctions & Regulation

Regulators face a growing dilemma—how to enforce financial sanctions while recognizing that many individuals use cryptocurrency as a financial lifeline.

According to Chainalysis, the decentralized nature of blockchain networks makes them difficult to fully control, even with advanced tracking tools. While enforcement actions may disrupt illicit flows, they cannot eliminate decentralized financial tools entirely.

For now, the global battle over crypto’s role in sanctioned economies is far from over, and the next wave of regulation will likely determine how financial enforcement and digital currency innovation collide in the coming years.

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