The Role of Cryptocurrencies in Conflicts: From Israel‑Iran War to the Black Market

Recent spikes in tensions between Israel and Iran have spotlighted cryptocurrencies' role in regional conflicts. The hack of the Iranian Nobitex exchange and the rise of crypto in illicit markets show how digital assets are wielded in war and global underground economies.

1. Cyber‑attack on NobitexOn June 18, 2025, the hacker group "Predatory Sparrow" (Gonjeshke Darande), allegedly tied to Israel, attacked Nobitex, stealing and "burning" roughly $48–90 million in crypto—mostly Tether and Bitcoin—via unrecoverable vanity addresses with anti‑IRGC messaging nypost.com+6reuters.com+6wired.com+6. The campaign aimed to disrupt Iran’s sanction‑evasion networks research-repository.griffith.edu.au+2en.wikipedia.org+2reuters.com+2.

2. Crypto market impactThe attack caused massive volatility: the crypto market cap dropped over $200 billion bitcoinist.com+5tronweekly.com+5ft.com+5. Bitcoin lost 4–6% shortly after but later stabilized around $104–105 k tronweekly.com. Ethereum plunged ~10%, triggering significant liquidation events mexc.com.

3. Use in war and black markets

   • Sanctions evasion and terror financing: Iran's IRGC and terrorist groups have shifted to crypto to bypass financial restrictions research-repository.griffith.edu.au+2en.wikipedia.org+2wired.com+2.

   • Privacy tokens: Monero and Zcash dominate on darknet for illicit transactions tradingview.com+1en.wikipedia.org+1.

   • Hybrid warfare tools: APT groups like North Korea’s Lazarus hack exchanges to fund covert operations en.wikipedia.org+1repository.upenn.edu+1.

Interesting Facts

• Ukraine received over $70 million in crypto donations during the 2022 Russia‑Ukraine war cointelegraph.com.

• The UN estimates up to 20% of terror financing occurs via cryptocurrencies icwa.in.

• EU plans to ban fully anonymous coins like Monero from 2027 en.wikipedia.org+8en.wikipedia.org+8tradingview.com+8.

• Tether (USDT) is heavily used by criminal groups in Russia, Syria, and Iran en.wikipedia.org+12ft.com+12en.wikipedia.org+12.

Opinions

• Fintech analysts: Bitcoin stays resilient but isn't a true safe‑haven asset during conflicts ft.com+2bitcoinist.com+2sciencedirect.com+2.

• Blockchain experts: Hackers purposely "burn" funds to send political messages rather than profit from theft reuters.com+1nypost.com+1.

• Regulators: Need balanced oversight of stablecoins and privacy tokens to prevent misuse while fostering innovation.

Conclusion

Cryptocurrencies offer both power and peril: they can provide financial autonomy in wartime but also fuel illicit finance, black‑market trade, and cyber warfare. The Nobitex attack exemplifies blockchain’s dual nature—transparent yet anonymous. The solution lies in smart regulation, not bans. Monitor crypto‑cyber raids and evolving legal frameworks.