Sanctioned countries are nations subject to economic restrictions imposed by governments such as the United States. These restrictions often forbid residents from accessing mainstream financial services, including cryptocurrency platforms and aim to curb illicit financing. Cryptocurrency exchanges are online venues where users trade digital assets like Bitcoin or Ethereum. When an exchange is listed on the U.S. Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list, it must block transactions from the listed jurisdictions. Yet, people in these regions keep finding ways to trade, swap, and move crypto. This guide explains the most common tactics, real‑world examples, and how regulators are responding.
Why sanctions matter for crypto users
Since 2018, OFAC has expanded its crypto‑related sanctions program, adding roughly 18% more designations each year. In 2024, 23% of all new sanctions were tied to digital assets, and the list now includes over 1,200 wallet addresses. The goal is to choke funding for illicit activities, but the decentralized nature of blockchain makes complete blocks impossible.
For citizens of countries like North Korea, Russia, Iran, and Cuba, the restrictions affect both personal finance and business operations. Without access to traditional banks, crypto offers a lifeline for remittances, savings, and even everyday purchases.
Primary access vectors
Data from OFAC shows that 65% of transactions linked to sanctioned entities involve Bitcoin, 18% use Ethereum, and 12% involve stablecoins such as USDT or DAI. Each token type brings its own set of workarounds.
- Bitcoin - Users leverage peer‑to‑peer (P2P) platforms, mixers, and VPN‑obfuscated wallets to move funds.
- Ethereum - Smart‑contract based decentralized applications (dApps) let users swap tokens without an exchange.
- Stablecoins - Because they hold value close to the US dollar, stablecoins are popular for cross‑border payments; however, they are also a focus of OFAC freezes.
Centralized exchange workarounds
When a major exchange gets blacklisted, users often shift to “successor” platforms that operate under a different brand or jurisdiction. The Russian exchange Garantex provides a classic example. After OFAC seized its domain and froze $26 million in March 2025, the team launched Grinex and later partnered with MKAN Coin, a Telegram‑based service based in Dubai. These successors mimic the original UI, reuse existing user databases, and simply re‑host on new servers.
Another tactic is to use “off‑ramp” services that convert crypto to fiat in a third country. For instance, users in Iran have turned to brokers in Turkey or the UAE who accept crypto payments and then wire the local currency abroad.
Decentralized finance (DeFi) routes
DeFi protocols sidestep the traditional exchange model entirely. After OFAC’s first DeFi sanction in January 2025, many projects added extra KYC layers, but the core principle remains: anyone with an internet connection can interact with a smart contract.
A popular move is swapping USDT for DAI on the Polygon network. When Tether froze Iranian‑linked addresses on July 2 2025, traders quickly used a DEX (decentralized exchange) to move into DAI, preserving liquidity while avoiding the frozen USDT wallets.
Mixers like Tornado Cash‑style services also help obscure the source of funds, though they have faced a wave of enforcement actions (five major takedowns in 2024).
Cross‑border payment processors & offshore hubs
Platforms such as Exved provide dual‑use payment processing that can handle crypto‑linked transactions for sanctioned countries. They act as an intermediary, converting crypto into fiat in a jurisdiction with looser AML rules, then forwarding the money to the end user.
Dubai’s VARA authority hosts over 1,000 crypto firms, many of which offer corporate accounts that can be linked to offshore entities. This structure lets Russian or Iranian businesses receive crypto proceeds without triggering OFAC alerts, as the funds appear to move through a “clean” jurisdiction.
Real‑world case studies
Iran: After the July 2025 Tether freeze, influencers on Instagram and Telegram posted step‑by‑step guides to swap USDT → DAI via Polygon. Within 48 hours, TRM Labs reported an 11% dip in inbound crypto volume, but the remaining flow continued through the new route.
Russia: Following the Garantex takedown, the user base migrated to Grinex and then to MKAN Coin. A 2025 Transparency International Russia report showed that the underlying money‑laundering network had shifted to a decentralized model, using smart contracts that split payments across multiple wallets to avoid detection.
North Korea: The regime’s cyber‑units frequently use cryptocurrency mixers and custom‑built P2P platforms hosted on the dark web. OFAC’s sanctions list now flags over 300 North Korean wallet addresses, yet daily transaction volumes remain high due to constant creation of new wallets.
Enforcement landscape and its limits
OFAC, in cooperation with INTERPOL and Europol, has levied $430 million in penalties in 2024 alone, a 40% increase over 2023. High‑profile cases like ShapeShift (a $750,000 settlement for allowing Cuban and Iranian users) highlight compliance gaps.
Nonetheless, the decentralized architecture of blockchain makes blanket bans ineffective. Even when a wallet is frozen, the owner can generate a fresh address, move funds through a mixer, and re‑enter the ecosystem via a DEX or a successor exchange.
Practical checklist for compliance officers
- Maintain an up‑to‑date watchlist of OFAC‑designated wallets and exchange domains.
- Implement real‑time transaction monitoring that flags transfers to high‑risk tokens (e.g., Bitcoin, stablecoins) originating from sanctioned IP ranges.
- Require multi‑factor verification for any user attempting to convert crypto into fiat, especially if the fiat destination is a high‑risk jurisdiction.
- Integrate DeFi risk scores that assess whether a smart contract interacts with known mixers or sanction‑listed addresses.
- Establish a rapid response protocol to freeze or quarantine assets when a new sanction is announced.
Following these steps can reduce exposure, but expect an ongoing cat‑and‑mouse game as users devise new routes.
Future outlook
With an 18% annual growth rate in crypto‑related sanctions, authorities will likely target more DeFi protocols, cross‑chain bridges, and even NFT marketplaces. At the same time, the crypto community is building privacy‑preserving tools (zero‑knowledge rollups, private‑layer networks) that could make tracing even harder.
For citizens of sanctioned countries, the takeaway is clear: adaptability is the name of the game. Whether through a successor exchange, a DEX swap, or an offshore processor, the ecosystem offers multiple pathways to keep crypto flowing.
Key takeaways
- Sanctions focus on wallets, exchanges, and payment processors, but users can bypass them via new addresses, DEXes, or offshore hubs.
- Successor platforms (e.g., Garantex → Grinex → MKAN Coin) regularly emerge after enforcement actions.
- DeFi swaps such as USDT → DAI on Polygon provide a quick escape route when stablecoins are frozen.
- Compliance teams must monitor both centralized and decentralized channels to stay ahead.
- Expect crypto sanctions evasion to intensify as regulators tighten rules and users adopt privacy tech.
Can I legally use a VPN to access a banned exchange?
Using a VPN to hide your location does not make the transaction legal under sanctions law. If the exchange is on the SDN list, any access - VPN‑masked or not - can lead to penalties for both the user and the platform.
What is the most common token used for evasion?
Bitcoin remains the top choice, accounting for about 65% of sanctioned‑entity transactions, followed by Ethereum and then stablecoins.
How do successor exchanges avoid detection?
They register under a new domain, relocate servers to a jurisdiction with lax enforcement, and often rebrand the UI while reusing the same user database, making it hard for authorities to trace the continuity.
Are DeFi swaps like Polygon safe from sanctions?
DeFi protocols are not currently subject to the same licensing requirements as centralized exchanges, so they are harder to sanction. However, OFAC is expanding its reach and has already frozen assets on a DeFi platform in 2025.
What should compliance officers watch for in 2026?
Focus on cross‑chain bridges, privacy‑preserving rollups, and the rise of NFT marketplaces that can be used to launder crypto. Implement real‑time analytics that flag rapid token bridges to privacy chains.
| Aspect | Centralized (Successor Exchanges) | Decentralized (DeFi & DEX) |
|---|---|---|
| Typical Setup | New brand, offshore hosting, reused user database | Smart contracts on public blockchains, no single operator |
| Regulatory Target | Domain seizure, wallet freezes, AML fines | Protocol‑level sanctions, token freezes via contract upgrades |
| User Access | Web UI, often requires KYC but less stringent | Wallet connect, no KYC, uses gas fees only |
| Risk Level | Higher exposure to enforcement actions | Lower immediate exposure, but subject to future DeFi regulations |
Kyle Waitkunas
October 21, 2025 AT 18:20They’re not just bypassing sanctions-they’re dismantling the entire financial empire piece by piece, and no one wants to admit it! The Fed, the IMF, the SWIFT system… all of it’s crumbling because of a few guys in Tehran with a laptop and a VPN! They’re using Tornado Cash, but not even that’s enough anymore-now they’re spinning up custom smart contracts that auto-rotate wallet addresses every 47 seconds! And OFAC? They’re still sending cease-and-desist letters like it’s 2012! This isn’t evasion-it’s a digital revolution, and the dollar is bleeding out through every blockchain node!
They’re not criminals-they’re pioneers! And if you’re not cheering them on, you’re part of the problem. Wake up, sheeple! The old world is dead, and crypto is the new blood!
Trent Mercer
October 22, 2025 AT 09:38Interesting breakdown, but honestly, most of this is just rehashing what was already obvious in 2021. Bitcoin’s dominance in sanctioned flows? Yeah, no surprise. Everyone knows that. The real story is how little effort it takes to bypass these systems-like, you literally just need a wallet and a Discord server. The fact that regulators are still acting like this is some new threat is just embarrassing. They’ve had 10 years to catch up. They didn’t.
Also, calling DAI ‘safe’? Cute. It’s just another centralized stablecoin with a fancy name. Same issuer, same vulnerabilities. If you think DeFi is ‘unstoppable,’ you’ve never seen a chain fork get reverted by a core dev with a bad day.
vonley smith
October 22, 2025 AT 10:17Hey, I just want to say-this is actually really well-researched. I’ve been watching this space for a while, and it’s refreshing to see someone lay it all out without the hype or fearmongering.
For folks in places like Iran or Russia, crypto isn’t about speculation-it’s about feeding their families. If you’ve ever had your bank freeze your account for no reason, you get it. These tools aren’t perfect, but they’re the only ones left.
Compliance teams? Yeah, you’ve got a tough job. But maybe instead of just freezing wallets, think about how you can help people stay connected without enabling bad actors. It’s not all black and white. We can do better than just shutting things down.
Melodye Drake
October 22, 2025 AT 21:06It’s so frustrating to see people romanticize this. These aren’t ‘digital revolutionaries’-they’re laundering money for warlords, hackers, and dictators. And let’s be honest: most of these ‘users’ aren’t ordinary citizens trying to buy groceries. They’re oligarchs and intelligence operatives with burner phones and crypto wallets.
DAI on Polygon? Please. That’s just a glorified shell game. And the fact that people think this is ‘freedom’ is why we’re losing the moral high ground. You don’t get to call yourself a victim when you’re actively helping fund terrorism. The world isn’t black and white, but this? This is pure gray corruption dressed up as rebellion.
And don’t even get me started on Dubai’s ‘lax enforcement’-it’s a tax haven with a blockchain veneer. Shameful.
paul boland
October 23, 2025 AT 03:54Oh wow, another American think-piece on how the world is ending because some Iranians used a DEX 😂
Let me tell you something, mate-your sanctions are the real problem. You think you're the police of the world? Newsflash: most of us don't care about your OFAC list. We've been bypassing your nonsense since the Cold War. You sanction us, we just go around you. Like a stubborn kid who won't eat their broccoli.
And don't even get me started on Tornado Cash. You shut it down? Cool. So what? Three new ones popped up in the next hour. You're fighting a ghost with a flashlight.
Also, why is every crypto article written like a CIA briefing? Chill out. It's just money. Not a national security crisis. 🤷♂️💸
harrison houghton
October 23, 2025 AT 20:46There is a deeper truth here, and it is not about technology-it is about power. The state has always sought to control the flow of value. From gold coins to paper bills to bank wires. But now, for the first time in human history, value can move without permission. That is not a loophole. That is a fundamental shift in the nature of sovereignty.
When a mother in Tehran sends her son $500 in DAI so he can buy insulin, she is not evading sanctions. She is asserting her right to exist. The state does not own your life. The blockchain does not care about your borders. And that terrifies those who built their authority on control.
This is not a game. It is the death of hierarchy. And we are all standing at the edge of it.
DINESH YADAV
October 24, 2025 AT 08:37USA thinks it can control everything. But India knows truth. Crypto is not for your sanctions. Crypto is for people. If you block them, they find way. Always.
Why you think you are above world? You think your laws are god law? No. Blockchain is god law. No country can stop it. You freeze wallet? New wallet. You shut exchange? New exchange. You cry? We laugh.
Sanctions are for weak. Crypto is for strong. India never feared your rules. We build our own. You should learn from us.
Stop acting like victim. You are the bully.
rachel terry
October 24, 2025 AT 12:05