Crypto Sanctions Evasion Trends and Regulatory Responses 2025

Estimated reading time: 4 minutes

• Increased complexity in sanctions evasion through cryptocurrency by both state and non-state actors.
• Cross-chain crime rising, making regulatory oversight more challenging.
• Regulators are tightening compliance and enforcement measures in response to growing illicit crypto activity.
• Groups such as Iranian, North Korean, and Russian entities are leveraging crypto for sanctions evasion.
• Mixing services and obfuscation techniques are evolving, prompting regulators to adapt their strategies.

In 2025, sanctions evasion through cryptocurrency is developing more complex methods, drawing increased attention from international regulators. Sanctioned actors, from nation-states to non-state groups, are using advanced blockchain obfuscation and mixing services to mask the movement of digital assets.

A major trend in illicit crypto activity is the increase in “cross-chain crime.” Decentralized exchanges (DEXs), which often lack strong anti-money laundering (AML) controls, provide channels for sanctioned entities to exchange assets between blockchains. This process can include swapping Ether for Tether or moving funds from Bitcoin to Ethereum through cross-chain bridges, making it more difficult for authorities to trace transactions[1]. The ability to transfer value across different cryptocurrencies has added complexity to regulatory oversight.

Both state and non-state actors have engaged in these tactics. Iranian groups have increased their use of cryptocurrency platforms in recent months to bypass longstanding financial restrictions[2]. Earlier this year, the U.S. Office of Foreign Assets Control (OFAC) sanctioned the Russia-based exchange Cryptex and its operator for laundering money tied to fraud, pointing to ongoing issues involving Russian entities in crypto-related sanctions cases[3].

North Korea is continuing to use cross-chain laundering techniques. Since 2022, North Korean ransomware attackers have relied on DEXs to move stolen funds, and this strategy has become more refined over time[4]. Non-state groups are also involved. In 2025, the Houthis have used cryptocurrency for sanctions evasion, weapons procurement, and other illicit financing activities, demonstrating how blockchain technology can support conflict economies while concealing funds behind encryption[5].

Cryptocurrency is also being used by paramilitary and extremist organizations. The Russian neo-Nazi group Task Force Rusich and affiliates including the Wagner Group had their crypto wallet addresses—across Bitcoin, Ethereum, and Tether—added to the OFAC Specially Designated Nationals (SDN) list. This action reflects the varied use of crypto-based evasion across different groups and digital currencies[6].

In response, regulators and private sector organizations have increased their enforcement and compliance efforts. Tether, a stablecoin issuer, has frozen wallet addresses linked to scams, terrorist financing, and sanctions evasion, providing an example of compliance actions within the decentralized sector[7]. Regulatory bodies like OFAC have widened their SDN listings to include wallet addresses tied to Iranian ransomware actors and Russian paramilitaries, indicating an updated approach that takes blockchain activity into account[8]. US and UK agencies have also revised their regulations, raising compliance requirements for crypto firms and suggesting that stricter oversight and enforcement are likely in the near future[9].

The ongoing changes in evasion methods and regulatory countermeasures illustrate the challenges facing authorities. As mixing services and cross-chain tools continue to develop, regulators are working to adapt their strategies in response to these evolving risks.

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1. VinciWorks, “State of Cryptocurrency Compliance 2025,” https://vinciworks.com/resources-files/Compliance/State-of-Cryptocurrency-Compliance-2025-v1.pdf
2. Chainalysis, “Crypto Crime and Sanctions 2025,” https://www.chainalysis.com/blog/crypto-crime-sanctions-2025/
3. Chainalysis, “Crypto Crime and Sanctions 2025,” https://www.chainalysis.com/blog/crypto-crime-sanctions-2025/
4. VinciWorks, “State of Cryptocurrency Compliance 2025,” https://vinciworks.com/resources-files/Compliance/State-of-Cryptocurrency-Compliance-2025-v1.pdf
5. TRM Labs, “From UAVs to Sanctions Evasion: How the Houthis Use Crypto,” https://www.trmlabs.com/resources/blog/from-uavs-to-sanctions-evasion-how-the-houthis-use-crypto
6. VinciWorks, “State of Cryptocurrency Compliance 2025,” https://vinciworks.com/resources-files/Compliance/State-of-Cryptocurrency-Compliance-2025-v1.pdf
7. Chainalysis, “2025 Crypto Crime Report Introduction,” https://www.chainalysis.com/blog/2025-crypto-crime-report-introduction/
8. VinciWorks, “State of Cryptocurrency Compliance 2025,” https://vinciworks.com/resources-files/Compliance/State-of-Cryptocurrency-Compliance-2025-v1.pdf
9. FinScan, “Regulatory Roundup May 2025: AML Deadlines, Crypto Enforcement Shifts, Sanctions Guidance, and AI,” https://www.finscan.com/post/regulatory-roundup-may-2025-aml-deadlines-crypto-enforcement-shifts-sanctions-guidance-and-ai