Bitcoin Flows from Sanctioned Sources

Axel Flodmark, Rasmus Samuelson, David Hasselquist, Martin Arlitt, Niklas Carlsson

Paper: Axel Flodmark, Rasmus Samuelson, David Hasselquist, Martin Arlitt, Niklas Carlsson, "Bitcoin Flows from Sanctioned Sources", Proc. IEEE Conference on Local Computer Networks (LCN), Sydney, Australia, Oct. 2025. (pdf)

Abstract: Cryptocurrencies' pseudonymity property poses regulatory challenges and has attracted illicit actors that try to avoid oversight. To counter this, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctions individuals and entities using Bitcoin for cybercrime, terrorism financing, and other illicit activities. However, the effectiveness of these measures remains uncertain. This study analyzes over 13 million Bitcoin transactions linked to sanctioned entities, tracing fund flows and exchange interactions. We find that ∼175,000 BTC was moved before sanctions took effect, with only 50 BTC remaining post-sanction, indicating preemptive fund displacement. Cybercrime-linked addresses accounted for the largest transfers—sometimes exceeding $1 billion—while sanctioned entities favored large, direct transactions to exchanges. Despite activity dropping immediately after sanctions took effect, some entities continued transacting for up to 1,500 days, exposing enforcement gaps. Our findings highlight key challenges in sanction enforcement, including delayed restrictions, exchange compliance gaps, and strategic fund movements. These insights inform policymakers and regulators seeking to strengthen cryptocurrency financial~controls.

Dataset(s)

The following description is under construction (but expect to use a crietria/method along the following lines) ...

To help build upon our work, we will make available datasets to other researchers but ask that you please email niklas.carlsson@liu.se with Subject: "Request for LCN 2025 dataset by [insert your university / research institute here]" from a valid email account from that university / research institute. In the email, also explain who you are and what you plan to do with the dataset (at a high level). We intend to only share the data with other resarchers and expect that the data is responsibly used for research purposes.

Citation format

When using the datasets, please cite the conference version of the paper:

Axel Flodmark, Rasmus Samuelson, David Hasselquist, Martin Arlitt, Niklas Carlsson, "Bitcoin Flows from Sanctioned Sources", Proc. IEEE Conference on Local Computer Networks (LCN), Sydney, Australia, Oct. 2025. (pdf)