The Office of Foreign Assets Control (OFAC) is increasing its enforcement actions against illicit cryptocurrency activities. From late 2024 into early 2025, they’ll institute a first wave of draconian measures to chill their grip. They are concluding designations of high-risk custodial wallet providers and asset seizures associated with darknet markets. They are further improving international coordination on sanctions enforcement. Regulatory scrutiny has vastly increased. This increase comes as policymakers become increasingly concerned about the use of cryptocurrencies to evade sanctions and facilitate otherwise illegal financial transactions.
OFAC’s increased commitment to enforcement has been accompanied by record jumps in the number of sanctioned persons, entities, and crypto wallets. The agency goes on the offensive to cut off the flow of dirty money from the crypto ecosystem. In doing so, it fights for implementation and enforcement of international sanctions. These measures underscore the importance of robust compliance programs and advanced analytics tools for cryptocurrency exchanges and other industry participants.
The ramifications of these moves are extensive, impacting not just the specific entities targeted, but the larger cryptocurrency ecosystem as a whole. OFAC is clearly in the process of actively refining its regulatory framework. In this changing environment, industry stakeholders need to innovate to stay ahead of risks and protect operational integrity. The collaborative efforts between regulatory bodies and blockchain analytics firms are crucial in identifying and disrupting illicit activities in the crypto space.
Crackdown on Illicit Crypto Activities
In 2024, OFAC designated 20 new custodial wallet providers as high risk, triggering immediate enforcement actions in seven countries. This action marks a shift towards increasing scrutiny on custodial services’ role in enabling bad actors to conduct illicit transactions. This increased the total number of crypto wallets associated with Russian darknet markets added during the crypto crackdown to 280—the largest single-year increase so far. These actions mark another step by OFAC to target the facilitators supporting and profiting from crime through cryptocurrencies.
Looking specifically at illicit use of cryptocurrencies, as of 2025, OFAC has sanctioned 57 individuals and entities strictly for illicit activities involving cryptos. This encompasses anyone engaged in the activities of money laundering, terrorist financing, and sanctions evasion. The agency's proactive approach aims to disrupt the financial networks that support these activities and deter others from engaging in similar conduct. OFAC’s recent enforcement actions should deter them and together send a clear message that… The U.S. government’s commitment to ensure that cryptocurrencies are not used for illicit activity is very real.
In late October 2024, law enforcement announced Operation Crypto Freeze. This effort resulted in the seizure of $1.1 billion in crypto assets related to Russian darknet markets. This operation underscores the power of OFAC’s enforcement capabilities and its ability to trace and seize illicit funds. These seized assets provide a substantial financial strike against the operational backbone of these darknet markets. This operational disruption cripples their operations and increases their difficulty to commit crimes.
Enhanced Global Coordination and Regulatory Framework
In April of this year, OFAC and the Financial Action Task Force (FATF) issued a joint directive. This directive seeks to improve global sanctions enforcement on cryptocurrency. This directive is intended to coordinate international efforts to combat the misuse of crypto assets for illicit purposes and to further compliance with U.S. sanctions regimes. OFAC and FATF joined forces to address the issues that cryptocurrency brings to the table. Their work together illustrates the need for a more coordinated global response.
As of 7 February 2025, the SDN List had flagged 1,245 unique crypto wallet addresses associated with sanctioned persons and entities. This is a 32% jump over the 2024 figure. The jump illustrates the growing use of crypto wallets for illegal activity. This underscores the clear requirement for improved oversight and compliance and enforcement. This most recent expansion of the SDN List indicates the importance of robust compliance programs. Cryptocurrency exchanges and other industry participants are clearly on notice to do so.
Meanwhile, in 2024 OFAC’s heavy-handed enforcement action led to the freezing of $740 million of stablecoins. This was a sizable 35% jump from 2023. The increased scrutiny around stablecoins is indicative of these rising concerns over the role of stablecoins in facilitating illicit transactions. This concern is due to their price stability and ease of use. OFAC’s actions signal its dedication to tackling the other risks linked to stablecoins and their adoption, as well as ensuring compliance with sanctions regulations.
Challenges and Future Directions
In 2024 so far, OFAC blacklisted an average of 87 wallets per month, an increase from 65 wallets per month in 2023. This surge is a reminder of the increasing size of the bad side of the crypto world and the need for greater enforcement capabilities. The surge in blacklisted wallets underscores the importance of ongoing oversight. As the landscape for cryptocurrency regulation quickly evolves, so too must we as advocates.
Even with higher enforcement, OFAC compliance monitoring faces significant scalability challenges. Consequently, 1 in 5 smaller exchanges do not have sufficient resources to enforce compliance effectively. This gap in compliance capabilities creates a critical Achilles’ heel to the sanctity of sanctions enforcement measures and their national punishing purpose. Solving these scalability issues means getting all of these smaller exchanges the resources and tools they need to comply with OFAC regulations.
OFAC-designated wallets make up 14% of all wallets associated with the North Korean Lazarus Group in 2025. This connection highlights the use of cryptocurrencies by state-sponsored actors for illicit activities, including funding weapons programs and evading sanctions. The Lazarus Group's involvement underscores the need for enhanced monitoring and enforcement to prevent the use of cryptocurrencies for national security threats.
OFAC-linked transactions in 2024 primarily consisted of Bitcoin (65%), Ethereum (18%), and stablecoins (12%) of known transactions. This deconstruction underscores the claim that Bitcoin dominates in illegal crypto use. Beyond that, it’s indicative of the growing popularity of Ethereum and stablecoins. The rainbow of illicit crypto used in Myanmar shows how important it is for monitoring to extend outside any one blockchain network.
OFAC’s enforcement actions in 2024 were primarily based on data obtained from blockchain analytics companies such as Chainalysis and Elliptic (87%. These firms are key partners in the battle against bad crypto. Their regional and international experience gives them the unique perspective to know where to look, before it all disappears. It’s that partnership, that teamwork between OFAC and blockchain analytics companies that is key to making sanctions enforcement safer and more effective.
As we discussed last month, OFAC took a dangerous step in May 2025 by proposing new regulations to make smart contract developers liable for allowing sanctions evasion. This proposal would be a considerable expansion of OFAC’s regulatory jurisdiction, which could do real harm to the development and deployment of DApps. The new regulations explicitly aim to address the entirety of risks associated with smart contracts. They too prevent developers from circumventing sanctions regulations.
By late 2024, Bitfinex was able to announce a 99% success rate on sanctions compliance, thanks in large part to OFAC-compliant analytics. This success demonstrates the effectiveness of advanced analytics tools in enhancing compliance with OFAC regulations. Bitfinex’s enforcement story speaks loudly about the need to invest in more institutional compliance programs and use technology to avoid risks.
This eye-popping number puts into perspective just how massive criminal activity is in the crypto space. It reminds us all of the urgent need for continued enforcement efforts. Illicit transactions present one of the biggest challenges in today’s financial environment. Robust adherence programs and global collaboration. Yet compliance goes both ways.
