Crypto Fueling Weapons Programs for Sanctioned States: FATF
Cryptocurrency is facilitating sanctioned states like North Korea and Iran in financing illicit weapons programs, according to a June 2025 FATF report. Blockchain-based assets are identified as vulnerabilities exploited by proliferation finance networks. North Korea's theft of $1.4 billion from ByBit in February exemplifies this, utilizing mixing services and unhosted wallets. Threat groups like Lazarus are implicated in these operations. The report highlights that illicit actors increase anonymity in transactions through mixing services and anonymity-enhancing cryptocurrencies, aiding in laundering proceeds from large-scale heists that support weapons proliferation. Crypto's global access, pseudonymity, and weak enforcement make it attractive to sanctioned states. Platforms like eXch have facilitated cashing out stolen funds. The report also indicates geopolitical coordination funded by crypto, with North Korean operatives reportedly active in the Russia-Ukraine war and evidence of Iran and Russia collaborating on drone manufacturing. Iran relies on militarized proxies and transnational criminal organizations to counter economic sanctions, with crypto playing a significant role in sustaining this coordination.
