In 2024, nearly $16 billion in cryptocurrency activity was linked to sanctioned entities and jurisdictions, with significant contributions from the mixing service Tornado Cash and increased crypto use in Iran. Despite U.S. sanctions imposed in 2022, Tornado Cash’s core infrastructure proved resilient, continuing to process substantial amounts of cryptocurrency. According to blockchain analytics firm Chainalysis, Tornado Cash saw a sharp rise in inflows in 2024, even though its overall inflows have been reduced since the sanctions were enacted. The platform’s privacy features have made it an appealing tool for cybercriminals, with nearly a quarter of the funds coming from illicit sources, including a major hack involving North Korean hackers.
Tornado Cash functions as a cryptocurrency mixer, pooling funds and obscuring the origins of transactions, making it difficult for authorities to trace the flow of funds. This feature, though praised by some for preserving privacy, has been exploited by criminals seeking to launder digital assets. Despite enforcement actions targeting Tornado Cash and its founders, who face legal charges, the platform remained active in 2024, processing approximately $100 million monthly. The U.S. Treasury’s Office of Foreign Assets Control (OFAC) issued 13 sanctions in 2024 related to cryptocurrency addresses, marking the second-highest number of sanctions in the last seven years.
In addition to the activity surrounding Tornado Cash, Iran witnessed a dramatic rise in cryptocurrency transactions in 2024 as citizens turned to digital currencies in response to severe economic conditions and international sanctions. The Iranian rial’s collapse and geopolitical tensions prompted many Iranians to use cryptocurrency as an alternative financial system to safeguard their wealth. Between January and April 2024, there were significant surges in crypto outflows from Iran, with $4.18 billion in total outflows by the end of the year. These outflows reflected a broader trend of growing distrust in the Iranian government and efforts by citizens to circumvent financial restrictions.
Despite the increasing use of cryptocurrency in sanctioned regions like Iran, regulators are tightening controls. In Iran, the number of cryptocurrency exchanges working with local services has decreased, with a 23% drop in the number of exchanges since 2022. While cryptocurrency use in these countries may not always be linked to illicit activities, the sanctions aimed at restricting financial flows continue to create tensions between enforcement and humanitarian considerations. Overall, while illicit cryptocurrency activities decreased in 2024, the global volume of crypto transactions grew substantially, reaching over $10.6 trillion.
