Chainalysis: Illegal Cryptocurrency Transactions Hit $154 Billion Last Year, Sanctioned Entity Funds Flow Surge 694%

Illegal cryptocurrency transactions reached $154 billion in 2025, marking a 162% increase from the previous year. This rise was attributed to heightened activity from sanctioned entities and state-backed actors leveraging blockchain networks for sanctions evasion according to Chainalysis.

The surge was driven primarily by criminal and state-aligned groups, including North Korea, Russia, and China-linked networks. North Korean-linked hackers alone accounted for $2 billion in stolen funds, with a significant portion coming from the Bybit exploit in February 2025 according to Chainalysis.

Russia's involvement was evident through the ruble-backed A7A5 stablecoin, which processed $93.3 billion in transactions in its first year. The U.S. and EU imposed sanctions on the stablecoin due to its role in facilitating cross-border settlements for sanctioned entities according to Chainalysis.

Why Did Illegal Transactions Surge in 2025?

Chainalysis attributed the rise to the professionalization of the illicit on-chain ecosystem and the integration of state-backed actors into established criminal supply chains. These actors bypass global financial restrictions by exploiting blockchain networks according to Chainalysis.

The report highlights the growing reliance on full-stack illegal infrastructure providers offering hosting, domain registration, and laundering services. These entities are used by ransomware operators, scam networks, and state-aligned actors according to Chainalysis.

How Are Stablecoins Facilitating Illicit Activity?

Stablecoins accounted for 84% of all illicit transaction volume in 2025. Their low volatility and ease of cross-border transfer make them attractive to criminals seeking to move large sums without detection according to Chainalysis.

Iranian proxy networks also facilitated over $2 billion in on-chain activity for money laundering, illicit oil sales, and arms procurement. Groups like Hezbollah and Hamas used crypto at unprecedented scales to fund their operations according to Chainalysis.

What Are Analysts Watching Next?

Chainalysis noted that the $154 billion figure is a lower-bound estimate and expects the total to rise as more illicit addresses are identified. The firm warned that the illicit share of all cryptocurrency transactions, though below 1%, could increase as state-backed actors continue to expand their presence according to Chainalysis.

Analysts are closely monitoring the role of stablecoins in facilitating illicit activity. With the total market cap of overcollateralized stablecoins nearing $300 billion, the potential for misuse is significant according to CoinTelegraph.

Regulatory frameworks such as the U.S. GENIUS Act and Europe's MiCA are expected to play a crucial role in curbing illicit activity. However, the effectiveness of these regulations in practice remains to be seen according to Decrypt.

The surge in illegal cryptocurrency transactions underscores the need for enhanced monitoring and enforcement mechanisms. As blockchain technology continues to evolve, so too will the methods used by criminal and state-backed actors to exploit it according to Chainalysis.