Sanctions escalation triggers a surge in on-chain transfers: Illegal cryptocurrency activities hit a record high in 2025

Against the backdrop of ongoing global sanctions, illegal cryptocurrency activities were pushed to unprecedented heights in 2025. Governments of multiple countries and entities on blacklists are increasingly leveraging blockchain networks to bypass traditional financial system restrictions, making “sanctioned fund chain on-chain” an undeniable trend.

According to the latest cryptocurrency crime report released by Chainalysis, at least $154 billion flowed into illegal cryptocurrency addresses in 2025, a roughly 162% increase from $59 billion in 2024. The report points out that this surge mainly results from large-scale on-chain fund transfers by sanctioned countries and related entities, rather than traditional scattered criminal activities.

Chainalysis defines 2025 as the “turning point for state-related illegal crypto activities.” The report emphasizes that on-chain behaviors during this phase are significantly different in scale, frequency, and coordination compared to the past, reflecting increasingly sophisticated strategies by sanctioned entities in utilizing blockchain technology. Russia is considered one of the key driving forces. Since the Ukraine conflict, the country has long endured international financial sanctions. In February 2025, Russia launched a token A7A5 pegged to the ruble, and in less than a year, its total transaction volume exceeded $93.3 billion, becoming a typical case of a nation-level use of crypto assets for value transfer.

Meanwhile, the scope of global sanctions itself is rapidly expanding. Data shows that approximately 80,000 entities and individuals worldwide are subject to different forms of sanctions. In 2024 alone, the US added 3,135 entities to the sanctions list, setting a new record. This “sanction inflation” has significantly increased demand for alternative payment systems, providing fertile ground for illegal cryptocurrency activities.

At the tool level, stablecoins have become the core vehicle for illegal fund flows. Chainalysis points out that in 2025, stablecoins accounted for about 84% of all illegal crypto transactions. Their price stability, high cross-border transfer efficiency, and liquidity—originally advantages for legitimate use—also attract sanctioned users.

Despite the absolute scale surging, the report still emphasizes that illegal activities account for less than 1% of the overall crypto economy. However, security risks are diversifying. Blockchain security firm PeckShield’s records show a significant increase in address poisoning, private key leaks, and social engineering attacks in 2025, with single losses often reaching hundreds of millions of dollars.

Overall, the combination of sanctions policies, geopolitical tensions, and crypto infrastructure is reshaping the nature of illegal cryptocurrency activities. This trend also raises higher demands for global crypto regulation and compliance in 2026, becoming an unavoidable long-term issue in the digital asset field.