Ongoing sanctions against nation-states pushed illicit cryptocurrency activity to unprecedented levels in 2025, as blacklisted governments and entities increasingly turned to blockchain networks to bypass financial restrictions.
Key Takeaways:
- Sanctioned state actors drove illicit crypto activity to record levels in 2025.
- Stablecoins dominated illicit flows, accounting for most on-chain volume.
- Illicit transactions still make up less than 1% of total crypto activity.
According to a new crypto crime report released Thursday by Chainalysis, illicit crypto addresses received at least $154 billion over the year, marking a 162% jump from $59 billion in 2024.
The surge was largely driven by sanctioned entities moving funds on-chain at scale.
Chainalysis Flags 2025 as a Turning Point for Illicit State-Linked Crypto Activity
Chainalysis described 2025 as a turning point, citing “unprecedented volumes associated with nation-states’ on-chain behavior” and calling it the latest phase in the evolution of the illicit crypto ecosystem.
Analysts said the scale and coordination of activity stood apart from prior years, reflecting growing sophistication among sanctioned actors.
A major contributor was Russia, which has faced sweeping international sanctions since its invasion of Ukraine.
In February 2025, the country launched a ruble-backed token known as A7A5. In less than a year, the token processed more than $93.3 billion in transactions, highlighting how state-linked crypto initiatives are increasingly used to route value outside traditional financial rails.
The expansion of sanctions worldwide has also intensified pressure on sanctioned parties to seek alternative payment systems.
The Global Sanctions Inflation Index estimated in May that nearly 80,000 entities and individuals were under sanctions globally.
Meanwhile, research from the Center for a New American Security found that the United States alone added 3,135 entities to its Specially Designated Nationals and Blocked Persons List in 2024, the highest annual total on record.
Stablecoins have emerged as the primary tool in illicit crypto flows, mirroring trends across the broader market.
Chainalysis reported that stablecoins accounted for 84% of all illicit transaction volume in 2025, driven by their price stability, ease of cross-border transfer, and widespread liquidity.
The firm noted that the same features fueling legitimate adoption have also made stablecoins attractive to sanctioned users.
Despite the sharp rise in illicit volumes, Chainalysis stressed that criminal activity remains a small fraction of the overall crypto economy.
Illicit transactions still account for less than 1% of total on-chain activity, even as their share edged slightly higher year over year.
PeckShield Reports Spike in Address-Poisoning and Key-Leak Exploits
Blockchain security firm PeckShield documented 26 major exploits in December, with address-poisoning scams and private-key leaks accounting for substantial losses.
One victim lost $50 million after mistakenly copying a fraudulent address that visually mimicked their intended destination.
Another major incident involved a private key leak tied to a multi-signature wallet, resulting in losses of approximately $27.3 million.
The industry’s vulnerability extends beyond technical exploits to social engineering schemes, with Brooklyn resident Ronald Spektor facing charges for allegedly stealing $16 million from roughly 100 Coinbase users by impersonating company employees.
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