How Stablecoin Networks Became a Bypass Channel for Sanctions Evasion

A groundbreaking investigation by blockchain analysis firm TRM Labs has exposed a systematic infrastructure for circumventing international financial restrictions through cryptocurrency platforms. The findings, covered by major media outlets, reveal that approximately $1 billion has moved through digital channels since 2023—a stark reminder of how decentralized assets can become tools for regulatory bypass.

The Infrastructure Behind Stablecoin Transfers

Two UK-registered cryptocurrency exchanges operating under different brand identities functioned as a unified operation. Blockchain investigators discovered that over half of all transaction volume between 2023 and 2025 traced back to entities on international watchlists. The preferred method: Tether’s USDT stablecoin on the Tron blockchain, chosen for its speed and perceived anonymity.

The growth trajectory paints a troubling picture:

• 2023: $24 million in tracked movements
• 2024: $619 million (a 25-fold increase)
• 2025: $410 million year-to-date

This exponential expansion demonstrates how cryptocurrency evolved from experimental use to a shadow banking backbone—enabling entities to route funds while maintaining plausible deniability about transaction origins.

Investigative Methodology and Network Mapping

TRM Labs employed sophisticated tracing techniques to map the operation. Analysts conducted controlled deposits and withdrawals to decode the exchanges’ internal wallet architecture, then followed the money across blockchain ledgers. Through this process, 187 distinct transactions were mapped to wallet addresses tied to sanctioned entities.

The investigation exposed connections to individuals historically involved in sanctions evasion schemes. One businessman previously convicted of establishing illicit financial networks for government interests had recently been released—and appeared connected to the current infrastructure. This pattern suggests sophisticated actors are modernizing old playbooks using blockchain’s veneer of legitimacy.

Real-World Implications: From Financing to Proxy Networks

One tracked transaction—a $10 million transfer—revealed the mechanism’s real-world application. Funds moved from sanctioned wallet addresses to individuals controlling resources used to finance regional militant organizations. This wasn’t theoretical; it was operational proof that stablecoins had become a preferred bypass method for funding geopolitical proxies.

Both platforms publicly claimed compliance with anti-money laundering standards. One listed certain jurisdictions as restricted; the other maintained no comparable restrictions. Neither entity provided substantive responses to investigative inquiries, leaving questions about oversight and willful blindness.

What This Reveals About Crypto Regulation

The case demonstrates a critical vulnerability: cryptocurrency infrastructure exists in jurisdictional gray zones. London-registered exchanges operated without apparent coordination with UK financial authorities. This gap—between regulatory intention and blockchain reality—remains the core weakness that sophisticated actors continue to exploit.

As sanctions regimes expand globally, expect state actors to increasingly view decentralized finance not as a technology but as a critical bypass infrastructure. The billion-dollar figure reported here likely understates the full scope of activity, given the tracing limitations of blockchain analysis firms.