TRM Labs Exposes How Nation-States Are Weaponizing Crypto to Evade Sanctions

Blockchain intelligence company TRM Labs said that cryptocurrency is being utilized by nation-states as a geopolitical instrument to a greater extent.

The report describes an increasing divide between administrations that use digital resources to evade accountability and those using the same technology to enhance accountability, transparency, and fiscal control.

The Blockchain Cold War: How Crypto Is Reshaping Global Power

As adoption has expanded, digital assets have become relevant to national economic strategies, sanctions enforcement, and state power.

Cryptocurrency poses a threat, as well as opportunities, to governments because, unlike the conventional financial system, which depends on institutions like the U.S. dollar, SWIFT messaging, and correspondent banking networks, value can be transferred across borders without intermediaries.

TRM Labs reported that certain states have resorted to crypto to circumvent limitations and finance operations that otherwise would be limited by sanctions.

There are others that are attempting to use blockchain-based systems to update payments, strengthen fiscal inclusion, and increase regulatory accountability.

This two-fold application has made crypto a strategic tool instead of an unbiased technology. North Korea is by far the most notable case of government-sponsored illegal crypto practices.

Investigations by TRM Labs indicate that in the last five years, cyber divisions of the North Korean government have stolen billions of dollars by hacking exchanges, decentralized fintech protocols, and cross-chain bridges.

A major incident in February 2025, involving the Bybit exchange, showed the scale of these operations.

According to TRM Labs, proceeds from these thefts are linked to funding the country’s nuclear and ballistic missile programs.

Separate data from a Chainalysis report released in December 2025 underscored the scale of the threat.

North Korean hackers stole at least $2.02 billion in cryptocurrency in 2025, a 51% increase from the previous year, despite carrying out fewer attacks.

The report estimates North Korea’s cumulative crypto theft at $6.75 billion, with DPRK-linked actors responsible for 76% of all service compromises in 2025.

Investigators say the stolen funds are typically laundered through mixers and privacy tools, moved across multiple blockchains, converted into stablecoins, and eventually cashed out through over-the-counter brokers and foreign exchanges, often in Asia.

Crypto Emerges as a Secondary Lifeline for Sanctioned Economies

Russia has also experimented with digital assets following its exclusion from major Western financial systems after the 2022 invasion of Ukraine.

Russian and Iranian intermediaries have tested crypto-based trade to bypass the U.S. dollar, while pro-Russian groups have raised digital assets for military-linked causes.

Industrial-scale mining operations have also played a role in converting domestic energy into assets that can be monetized abroad.

Iran has taken a different approach by formally integrating crypto mining into its economic strategy.

The government legalized Bitcoin mining in 2019 and uses domestically mined BTC to pay for imports and mitigate sanctions pressure.

TRM Labs said Iran-based miners contribute a measurable share of global hash rate, with mined assets sold to the central bank and later used in sanctioned trade through regional intermediaries.

At the same time, TRM Labs pointed to broader, non-adversarial adoption of crypto infrastructure.

In Venezuela, worsening economic conditions and a weakening bolívar have driven increased reliance on stablecoins for everyday payments, according to a December 2025 TRM report.

In the U.S., Europe, Japan, and Singapore, regulators are using blockchain analytics to strengthen sanctions enforcement, trace ransomware proceeds, and improve oversight.

Also, initiatives such as the T3 Financial Crime Unit have frozen more than $300 million in criminal assets through coordinated public–private efforts.

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