Iran’s Crypto Flows Drop 11% Amid Israel Conflict, Nobitex Hack and Tether Blacklist

Iran’s cryptocurrency flows have fallen sharply in 2025 following a series of destabilizing events, including renewed conflict with Israel, a $90 million hack targeting the country’s largest exchange, and Tether’s unprecedented freeze of dozens of wallets linked to Iran.

According to a new report from blockchain intelligence firm TRM Labs, flows into Iranian crypto platforms totaled $3.7 billion between January and July, representing an 11% decline year-over-year.

The most dramatic pullback occurred in June and July, coinciding with escalating regional tensions and widespread network disruptions inside Iran.

TRM Labs noted that the downturn aligned with a breakdown in nuclear negotiations and a 12-day military clash with Israel beginning on June 13.

The conflict included both kinetic and cyber operations, prompting blackouts and government-initiated internet shutdowns, which slowed transaction processing and reduced exchange liquidity nationwide.

For many Iranians, crypto, particularly U.S. dollar-backed stablecoins, remain a vital hedge against inflation and sanctions that have cut the country off from formal banking channels.

Nobitex Hack Erodes Trust in Domestic Exchanges

But geopolitical risks have amplified transaction volatility and disrupted confidence in local platforms.

Much of the June decline stemmed from the $90 million security breach at Nobitex on June 18, which processes nearly 87% of all crypto trading volume in Iran.

Pro-Israel hacker group Predatory Sparrow claimed responsibility for the attack, which came at the height of hostilities.

Although Nobitex continues to be the dominant player in Iran’s crypto market, the incident damaged sentiment, disrupted liquidity, and temporarily pushed users toward smaller alternatives and offshore exchanges.

At the peak of the crisis, outflows surged by more than 150% in a single week, much of it directed toward high-risk foreign venues with little to no KYC requirements, according to TRM Labs.

Tether Freezes 42 Wallets in Largest Move Against Iran

A second blow came when Tether froze 42 addresses tied to Iranian entities on July 2, marking the stablecoin issuer’s largest enforcement action in the region to date.

The blacklisted wallets primarily held balances of USDT on TRON — the blockchain most widely used for transactions in Iran.

The freeze triggered a coordinated call across Iranian exchanges, social media influencers, and even state-affiliated channels, urging users to rotate out of TRON-based USDT and migrate into alternative stablecoins such as DAI on Polygon.

Despite these disruptions, TRM noted that stablecoins remain central to Iranian crypto usage, serving as a key tool to store value in an economy plagued by currency devaluation and triple-digit inflation.

Crypto Still Powers Iran’s Parallel Economy

Even with flows down, TRM’s analysis highlights how Iran continues to leverage crypto for strategic and political purposes. The country has used digital assets to pay Chinese suppliers for semiconductors, drone parts, and other high-value hardware linked to both its artificial intelligence and defense ambitions.

Crypto is also used to facilitate covert payments to foreign operatives, though TRM emphasized that illicit activity accounts for less than 1% of total Iranian crypto volume.

Iran’s 11% decline in crypto flows reflects the fragile balance between retail adoption, sanctions pressure, and geopolitical instability.

While stablecoins and exchanges like Nobitex remain essential tools for citizens navigating inflation and capital controls, large-scale hacks, wallet freezes, and heightened conflict have exposed the vulnerabilities of an ecosystem operating at the edge of global finance.

In the longer term, Iran’s reliance on crypto underscores its unique role as a global case study: demonstrating both how digital assets can empower populations facing economic isolation and how they can be weaponized in geopolitically charged environments.