When you send Bitcoin or Ethereum to someone, you might think it’s just a digital transaction. But if that recipient is on the OFAC sanctions list, you could be breaking U.S. law - even if you didn’t know it. As of 2025, the Office of Foreign Assets Control (OFAC) has added over 1,200 cryptocurrency wallet addresses to its Specially Designated Nationals (SDN) list. This isn’t just about blocking banks anymore. It’s about freezing digital wallets, tracing blockchain trails, and shutting down entire networks that move money for criminals, terrorists, and hostile governments.
What Exactly Is the OFAC Sanctions List?
OFAC, part of the U.S. Department of the Treasury, doesn’t just target banks or businesses. It goes straight for the addresses. Every wallet on the list - whether it’s a Bitcoin, Ethereum, or Monero address - is legally off-limits to anyone doing business with U.S. entities. That means U.S.-based exchanges like Coinbase or Kraken must block any transaction going to or from those addresses. Even if you’re in New Zealand, Canada, or Brazil, if your crypto platform has any U.S. ties, you’re subject to these rules.
The list includes not just individuals, but entire organizations. In 2025, OFAC sanctioned SECONDEYE SOLUTION - a front linked to the Internet Research Agency LLC, the same group tied to foreign election interference. Their wallets? 1NE2NiGhhbkFPSEyNWwj7hKGhGDedBtSrQ and 19D8PHBjZH29uS1uPZ4m3sVyqqfF8UFG9o. Those aren’t random strings. They’re active addresses that have moved millions in Bitcoin.
Cryptocurrencies Targeted by OFAC
OFAC doesn’t pick favorites. It goes after all major coins - even the ones designed to hide transactions. The sanctioned list covers 17 different cryptocurrencies:
- Bitcoin (XBT)
- Ethereum (ETH)
- Monero (XMR)
- Litecoin (LTC)
- ZCash (ZEC)
- DASH
- Bitcoin Gold (BTG)
- Ethereum Classic (ETC)
- Bitcoin Satoshi Vision (BSV)
- Bitcoin Cash (BCH)
- Verge (XVG)
- USD Coin (USDC)
- USD Tether (USDT)
- Ripple (XRP)
- Tron (TRX)
- Arbitrum (ARB)
- Binance Smart Chain (BSC)
Why so many? Because bad actors use them all. Monero and ZCash are popular for privacy. USDT and USDC are used to move large sums quickly without price swings. Tron and Arbitrum help bypass Ethereum’s high fees. OFAC tracks them all.
How OFAC Tracks Crypto Wallets
Before 2025, OFAC’s tools were clunky. Now, they’ve upgraded to OFAC Blacklist v2.0, launched in May 2025. This system doesn’t just list addresses - it connects them. It tracks how funds flow between wallets, flags clusters of addresses linked to the same operator, and even monitors layer-2 networks like Polygon and Arbitrum, where transactions were once harder to trace.
Compliance platforms like Scorechain now update their screening tools within 15 minutes of an OFAC release. That’s faster than most banks update their internal systems. When OFAC adds a new wallet, exchanges like Binance and Coinbase freeze it automatically. No human approval needed. No delay.
Here’s how it works behind the scenes:
- OFAC releases a new XML file:
sdn_advanced.xml - Compliance software parses the file and extracts wallet addresses
- Transaction monitoring systems cross-check every incoming/outgoing transfer
- If a match is found, the transaction is blocked and reported
- Alerts go to regulators and law enforcement
It’s not perfect. But it’s getting closer.
Real Cases: Who’s on the List?
OFAC doesn’t just slap names on a list. It publishes real-world examples.
Iranian Oil Money: In September 2025, Iranian nationals Alireza Derakhshan and Arash Estaki Alivand were sanctioned. Their wallets received over $600 million in proceeds from oil sales. Most came in via Ethereum and TRON. They used decentralized exchanges to swap crypto into stablecoins, then moved funds through multiple wallets to hide the trail. OFAC traced it all.
Garantex Exchange: This crypto exchange, based in Russia, was shut down in March 2025 after being linked to laundering over $26 million. U.S. Secret Service, German police, and Finnish authorities raided their servers. Even after Garantex tried to relaunch as “Grinex,” OFAC added new addresses and indicted its executives. The case showed how sanctions can follow a company even after it changes its name.
Lazarus Group: North Korea’s hacking team stole $200 million in Q1 2025, funneling it through DeFi protocols like Uniswap and Curve. OFAC flagged the smart contracts they used. That’s new. Before, they only targeted wallets. Now, they’re targeting the code itself.
DeFi, DAOs, and the New Frontiers
One of the biggest shifts in 2025 was OFAC’s decision to sanction DAOs - decentralized organizations with no CEO, no headquarters, no legal structure. If a DAO’s smart contract is used to launder money, it can be added to the sanctions list. No person needs to be named. Just the contract address.
And then came the AI bot.
In February 2025, OFAC sanctioned the first AI-powered autonomous trading bot used by a sanctioned entity. The bot moved $60 million through 12 different wallets, auto-swapping tokens to avoid detection. It wasn’t human-run. It learned from past transactions. OFAC didn’t just freeze the bot’s wallet - they froze the entire algorithm. That’s a legal first.
And it’s not over. Proposed regulations in May 2025 would make smart contract developers personally liable if their code is used for sanctions evasion. Imagine being sued because someone used your DeFi protocol to launder money. That’s the new reality.
Why Stablecoins Are the #1 Tool for Sanctioned Actors
Bitcoin is flashy. But for moving large sums quietly? It’s stablecoins - especially USDT - that do the heavy lifting.
In March 2025, Tether froze $450 million tied to Iranian entities. Why? Because USDT operates on public blockchains, and its issuer, Tether Limited, is subject to U.S. jurisdiction. Unlike Bitcoin, which is peer-to-peer, USDT has a central issuer who can freeze funds. That’s why sanctioned actors love it: it’s fast, global, and stable. But it’s also the easiest to track.
OFAC’s data shows 73% of all sanctioned crypto transactions in 2025 involved USDT or USDC. Not because they’re the most private - but because they’re the most practical.
What Happens If You Send Crypto to a Sanctioned Address?
If you’re a regular user, you probably won’t know. Most wallets don’t show OFAC flags. But if you’re running an exchange, wallet service, or DeFi platform? You’re legally required to screen every transaction. Failure can mean fines, loss of licenses, or criminal charges.
Here’s what’s at stake:
- Exchanges that don’t screen can lose their U.S. banking access
- Developers of DeFi protocols can be sued if their code enables evasion
- Individuals who knowingly transact with sanctioned addresses face asset seizure
There’s no “I didn’t know” defense if you’re a business. The law expects you to know.
How to Stay Compliant
If you’re a crypto business, here’s what you need:
- Real-time screening software that updates within 15 minutes of OFAC releases
- Support for all 17 sanctioned cryptocurrencies
- Monitoring of layer-2 networks and DeFi protocols
- Integration with OFAC’s XML data feed (sdn_advanced.xml)
- Audit trail showing you screened every transaction
Most platforms take 3 to 6 months to build this from scratch. But there are third-party tools - like Chainalysis, Elliptic, and Scorechain - that do it for you. They’re not cheap. But they’re cheaper than a $50 million fine.
What’s Next?
OFAC’s next moves are clear:
- More sanctions on privacy coins - Monero, ZCash, and others will face tighter scrutiny
- Expanded tracking of cross-chain bridges - where money moves between blockchains
- More joint operations with Europol and Interpol - like the six international raids in 2024
- Increased rewards - the U.S. State Department now offers up to $5 million for info leading to Garantex executives’ arrest
The goal isn’t to stop crypto. It’s to stop crime using crypto. And the tools to do it are getting smarter every day.
Can I still send crypto to someone if I don’t know they’re sanctioned?
If you’re an individual sending a small amount to a friend, you’re unlikely to be targeted. But if you’re a business - like an exchange, wallet provider, or DeFi app - you’re legally required to screen every transaction. Ignorance isn’t a defense for companies. OFAC expects you to use screening tools. If you don’t, you risk fines or losing your license.
Are all crypto wallets on the OFAC list public?
Yes. The OFAC sanctions list is public and downloadable as an XML file. But not every wallet that’s ever been used for crime is on it. OFAC only adds addresses linked to confirmed violations - usually after investigation. Experts estimate the list covers less than 10% of all illicit crypto activity. Many bad actors still slip through.
Can I avoid sanctions by using Monero or ZCash?
Not anymore. While Monero and ZCash were once considered “untraceable,” OFAC now tracks them through transaction patterns, timing, and linking to known addresses. Exchanges that accept them are required to flag suspicious activity. In 2025, multiple Monero wallets linked to ransomware gangs were added to the sanctions list. Privacy coins aren’t safe - they’re just harder to trace, not impossible.
Do OFAC sanctions apply outside the U.S.?
Yes - if your service has any U.S. connection. That includes using U.S.-based servers, having U.S. customers, or holding a U.S. bank account. Even if you’re based in New Zealand or Australia, if your crypto platform processes transactions through a U.S. bank, you must comply. Most major exchanges worldwide follow OFAC rules simply because they need access to the U.S. financial system.
What happens if I accidentally send crypto to a sanctioned address?
If it’s a one-time mistake and you’re not a business, OFAC rarely takes action. But if you’re a service provider, you must report it immediately and freeze the funds. Failure to report can lead to penalties. Some platforms now auto-freeze and notify users if a transaction hits a sanctioned address - so you’ll know right away.
Can OFAC freeze my personal wallet?
Only if you’re on the sanctions list yourself - not if you’re just sending money to someone who is. OFAC doesn’t freeze wallets of ordinary users unless they’re directly linked to a sanctioned entity. But if you’re a business and you process transactions for sanctioned addresses, your entire operation can be frozen - including bank accounts and assets.