The Number of Sanctioned Crypto Addresses Rose by 250% In the Year 2022

Crypto crime is a real and pressing concern for governments around the world. Bad actors have been exploiting people’s crypto investments for years, stealing billions of dollars from unsuspecting investors. Even worse, crypto funds serious crimes, including human and drug trafficking, money laundering, and ransomware attacks. We need urgent intervention to stem these vices.

The US Treasury Department’s Office of Foreign Assets Control (OFAC) has taken up this challenge and is leading the charge. OFAC is tackling crypto-related crime by sanctioning crypto addresses linked to illegal activity. CryptoMonday.de reports that OFAC sanctioned 350 such addresses in 2022, a 250% increase compared to the 100 it did in 2021.

A Wake-up Call

CryptoMonday’s CEO, Jonathan Merry, has spoken on the growing number of OFAC-sanctioned crypto addresses. He says their spike is a stark reminder that the scourge of illegal activity is alive in the crypto space. As such, it is a rallying point for more effort in combating these vices. He explained:

The 250% surge in sanctioned crypto addresses is a wake-up call to the crypto industry. It’s a reminder for the crypto community to come together and put in place robust measures to ensure the security and integrity of the crypto ecosystem.

CryptoMonday’s CEO, Jonathan Merry

OFAC’s success in tackling illicit activity in the crypto space speaks volumes about the importance of collaboration. The agency has gained a significant boost through cooperative Centralized Exchanges, allowing it to track suspicious crypto addresses. Additionally, blockchain transactions effectively offer an inherent level of transparency in monitoring digital currency movements.

A Shift of Strategy

OFAC’s strategies to combat illicit crypto transactions shifted significantly in 2022. Rather than just focusing on individual criminal actors, it expanded its scope and now tracks down crypto entities. This increased focus has already paid off, as highlighted by a Chainalysis report revealing the agency sanctioned ten entities abetting crypto crimes, some of which had up to 100 associated crypto addresses.

Prominent on the ten sanctioned entities list were Garantex, a Russian cryptocurrency exchange; Hydra, a dark web marketplace; and Tornado Cash, a crypto mixer. All three found themselves in OFAC’s crosshairs for money laundering. Additionally, Hydra attracted OFAC’s sanctions for running a criminal marketplace.

OFAC’s Efforts Bore Mixed Outcomes

OFAC’s sanctions certainly hit Hydra hard and forced it to go under following a multi-government action that resulted in the seizure of its main servers. Grantex managed to stay afloat, ironically benefitting from America’s shunning as its huge home market and Russia’s refusal to follow the OFAC sanctions enabled it to increase its volumes.

Meanwhile, Tornado Cash took down its website in response. But authorities have failed to take the platform down entirely due to its decentralized nature. As per Chainalaysis‘ report, though, inflows into the mixer saw a 68% dip after OFAC sanctioned it.

What’s clear is that sanctions work, and with intergovernmental cooperation, they can achieve more in sanitizing the crypto landscape.