February 23, 2025
The desire of Iranians to get their wealth out of Iran caused a major spike in cryptocurrency activity last year, as wealthy Iranians bought up crypto coins to try to protect their wealth and move it somewhere else.
In a report released February 19, blockchain analytics firm Chainalysis said that despite sanctions against Tornado Cash in 2022 by the US Treasury’s Office of Foreign Assets Control, the “core infrastructure of the platform has proven difficult to shut down.”
The report said individual Iranians moved more money out of the country’s beleaguered financial system and into cryptocurrency in 2024 than ever before.
Tornado Cash pools together and mixes funds, making them harder to trace. Co-founders Roman Semenov and Roman Storm have each been indicted in the US on money laundering charges, while another co-founder, Alexey Pertsev, was sentenced in the Netherlands to 64 months in prison.
The amount of cryptocurrency flowing into the mixer is down overall since sanctions were put in place — including a 90% drop immediately afterwards — but Tornado Cash still processed about $100 million each month last year.
The founders and some other crypto advocates say the service serves a legitimate privacy function, but its anonymizing service has also made it a magnet for cybercriminals laundering digital assets. In 2024, Chainalysis said, nearly a quarter of inflows into the platform were stolen — including $145 million in Ethereum stolen from the Heco Chain blockchain protocol, allegedly by North Korean hackers.
Under the weight of sanctions attempting to cut off Iranian access to the Western banking sector, Iranians showed a remarkable turn to digital currencies in 2024. This is likely due to a cratering of the rial.
In early April 2024, Israel’s bombing of the Iranian Embassy in Damascus triggered speculation that Tehran would retaliate. That tense situation likely triggered a spike in outflows of cryptocurrency from Iran, first on April 9 and then on April 14, the day after Iranian-backed militant groups launched hundreds of drones at Israel. Such spikes in trading activity occurred throughout the year in response to the chaotic geopolitical situation.
Outflows of cryptocurrency from Iran reached $4.18 billion in 2024, up about 70% year-over-year. “A closer examination of these outflows suggests they are not necessarily driven by illicit finance or state-sponsored activity, but rather by Iranian citizens’ deepening distrust in the government and a pressing need to move funds out of the country,” Chainalysis said.
