In the Crossfire: Are Your Crypto Assets Really Safe in the Era of Hybrid Warfare?

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Gold, War, and the Search for a Safe Haven Asset

For thousands of years, humanity turned to gold as a reliable store of value and medium of exchange during times of war and upheaval. Gold was prized for its portability, universal acceptance, and durability, qualities that made it indispensable when traditional currencies failed. Historical accounts show that gold often financed armies and secured peace treaties; nations on the gold standard could better sustain war efforts, and individuals hoarded gold to preserve wealth amid crisis. In essence, gold became the safe-haven asset in conflicts: when paper money lost trust, people literally banked on bullion.

Today, in our digital age, crypto has emerged as a new kind of “digital gold” for populations caught in the crossfire of conflicts and economic warfare. Like gold, Bitcoin and other cryptocurrencies are not tied to any single government. They can be transferred across borders in minutes, and are resistant to censorship or seizure properties that become incredibly valuable when banks are cut off by sanctions. As war and geopolitical strife disrupt traditional finance, many are asking if crypto can play the same role gold once did in preserving wealth and enabling transactions under duress.

However, this shift from physical to digital safe haven brings new risks and challenges that gold never had to face. In the era of hybrid warfare, where cyberattacks and economic sanctions blur with kinetic conflict, are crypto assets truly safe? To answer that, we must examine how conflicts are driving crypto adoption and how those same conflicts are putting crypto in the line of fire.

War and Sanctions: An Unexpected Driver of Crypto Adoption

Wartime chaos and international sanctions have become an unintended catalyst for cryptocurrency adoption in recent years. When conventional banking systems falter or when civilians are cut off from the global financial network, crypto can fill the void. Unlike the speculative frenzy that often grabs headlines, this kind of crypto usage is driven by necessity, not hype.

Consider populations living through conflict or heavy sanctions. In countries like Yemen, ongoing civil war and sanctions have crippled banks and payment channels. Local citizens have increasingly turned to crypto, especially DeFi tools, as a lifeline to “bank themselves” when no traditional banks are accessible.

Yemen is not alone. Venezuela, Syria, Afghanistan, and other crisis-hit economies have seen similar patterns of citizens adopting crypto when inflation, sanctions, or conflict wreck the usual financial order. Even in Ukraine – dubbed the first “crypto war” – both the government and ordinary people embraced cryptocurrencies in 2022 to receive donations and make payments after the war disrupted banking. These examples underscore an important point: when traditional finance fails, people find a way. Cryptocurrencies’ borderless nature and immunity to government controls make them an emergency exit from a collapsing system.

Sanctions in particular have proven to be a powerful push factor into crypto. When a country is cut off from SWIFT or sees its banks blacklisted, both the state and its citizens often explore digital assets to move value. Academic research suggests that sanctions can significantly motivate cryptocurrency adoption, especially in heavily sanctioned regions. We can see this in real time: after the U.S. tightened sanctions on the Houthis in Yemen, a local exchange’s volume spiked 270% as people scrambled for alternatives. When those sanctions were later reinforced, volumes jumped over 220% again. And as a TRM Labs report notes, each ratcheting up of sanctions on the Houthis (and their backer Iran) is likely to “ignite higher crypto adoption” as traditional avenues close off.

Crucially, it’s not just rebel groups or activists – everyday people are using crypto under sanctions. For “vulnerable, war-torn populations,” crypto offers a modicum of stability: “the ability to bypass the disruption in local financial services offers a modicum of financial resilience,” according to TRM Labs. In practical terms, that might mean a family receiving Bitcoin from relatives abroad because international wire services won’t operate, or a shopkeeper using stablecoins to pay suppliers because the local currency is in freefall. These are not the stereotypical crypto bros chasing moonshots; these are families and businesses trying to survive. Ironically, one of the most effective drivers of mass crypto adoption in some regions has been precisely what most would consider a nightmare scenario: sanctions and war. They are the ultimate stress test – and in many cases, crypto has stepped up to keep value flowing when nothing else could.

States Turn to Crypto to Evade Restrictions

Crypto isn’t just a refuge for individuals, sanctioned states are increasingly weaponizing it to blunt economic isolation. In Iran, virtual assets have become part of a broader geopolitical toolkit, helping fund strategic programs like drone development. Blockchain intelligence firm TRM Labs notes that Iranian entities are actively experimenting with crypto to bypass traditional banking constraints and build a “crypto arsenal” parallel to their military efforts.

A key pillar of this effort is Nobitex, Iran’s largest domestic crypto exchange. Cut off from global financial systems, Iranians rely on platforms like this to access Bitcoin, Tether, and other crypto, both to hedge against inflation and settle foreign payments. Having processed over $11 billion in volume, Nobitex reflects both the scale of demand and the structural need for local crypto infrastructure in a sanctioned economy.

But this infrastructure has a dual-use nature. While Nobitex enables civilians to survive economic instability, it’s also been linked to illicit state activity. Reports have connected it to wallets used by the IRGC, Hamas affiliates, and even sanctioned Russian exchanges. These platforms allow large-volume crypto flows with weak KYC, making them ideal pipelines for moving funds covertly, blurring the line between civilian use and sanctions evasion.

North Korea has taken this to an industrial scale. The Lazarus Group, its state-sponsored hacker arm, has stolen billions from crypto exchanges, with proceeds likely funding nuclear weapons programs. The 2025 Bybit hack, where Lazarus siphoned off $1.5 billion by exploiting flaws in the exchange’s approval process, underscored just how far nation-states will go to exploit crypto vulnerabilities. For rogue regimes, stealing crypto is now a strategic alternative to traditional finance.

Crypto Exchanges in the Crosshairs of Hybrid Warfare

When cryptos become a lifeline for sanctioned states or war-torn communities, they also become high-value targets for their adversaries. We are now seeing a new form of hybrid warfare where cyberattacks on crypto platforms are used as a tool to disrupt enemies’ finances. Unlike traditional sanctions (which are slow and require broad compliance), hacking a cryptocurrency exchange can have an immediate impact – draining resources and sowing chaos. Recent events confirm that state-aligned hackers are actively targeting crypto infrastructure as part of geopolitical conflicts.

One dramatic example unfolded in June 2025 amid escalating tensions between Israel and Iran. An Israel-linked hacking group known as Gonjeshke Darande (or “Predatory Sparrow”) launched a cyberattack on Iran’s largest crypto exchange, Nobitex, stealing around $90 million worth of digital assets. In what was essentially a digital act of war, the hackers didn’t even attempt to profit from the theft – instead, they “burned” the funds by sending them to wallet addresses that no one can access (the addresses contained the telling phrase “FckIRGCterrorists”). This is akin to raiding a bank and setting the cash on fire. The message was clear: the attack was meant to cripple Iran’s crypto lifeline, not enrich the attackers.

International cybersecurity analysts noted that this Nobitex hack was likely politically motivated as part of the broader Israel-Iran conflict, which had just seen Israel strike Iranian military sites days before. Elliptic, a crypto crime consultancy, called it “the first hack of this scale exclusively for geopolitical purposes”.

The attackers used burner addresses with no private keys, essentially ensuring the $90M in stolen crypto is irretrievable. By doing so, they denied those funds to Iran entirely. This tactic shows a grim new reality: destroying an enemy’s financial assets can be as effective as blowing up a fuel depot or sabotaging infrastructure – and crypto exchanges are vulnerable nodes that can be struck from afar.

The fallout within Iran was severe. Nobitex had to reassure users that their remaining funds were safe (even as on-chain forensics confirmed the stolen funds were gone forever). The exchange hurriedly moved other reserves into new cold wallets to bolster security. Meanwhile, Iran’s central bank imposed an emergency curfew on all domestic crypto exchanges, restricting their operations to daylight hours in an effort to contain further damage. This “crypto curfew” was an extraordinary measure, reflecting fear that more attacks or bank runs could occur at night. The Iranian regime recognized that its crypto infrastructure had become a strategic liability – a target that enemies could hit to cause internal disruption.

The $1.5 Billion Bybit Heist: North Korea’s Crypto Offensive

Iran isn’t the only sanctioned state turning to crypto. North Korea has made it a national strategy, and in February 2025, its Lazarus Group pulled off one of the largest crypto heists in history. The target was Bybit, a top global exchange based in Dubai. Despite Bybit’s multi-signature cold wallet system, Lazarus exploited a fatal weakness: the human element. Investigators found the attackers had inserted malicious code into a seemingly routine transaction. When top executives, including CEO Ben Zhou, approved the transfer, they unknowingly signed over access to the exchange’s main Ethereum wallet, handing Lazarus control of nearly 400,000 ETH (around $1.4B).

The method shocked cybersecurity experts. This wasn’t a bug exploit but a deception of the user interface that led humans to approve their own compromise. Bybit later admitted its smart contract logic had been manipulated and masked to appear normal.

Once the crypto was stolen, the hackers quickly laundered over $160 million, swapping funds through decentralized exchanges and splitting them across more than 50 wallets. U.S. authorities attributed the hack to Lazarus and flagged key Ethereum addresses, though much of the stolen crypto likely slipped through with some routed through a DEX called “eXch” that refused to block suspicious flows.

The breach sent shockwaves across the crypto world. If a top-10 exchange could be gutted in a single operation, it raised existential questions about centralized platforms’ resilience. U.S. lawmakers cited the Bybit hack as a national security concern, fueling calls for stricter regulation. For everyday users, the message was stark: even well-funded platforms with cold storage aren’t immune if humans can be manipulated. The attack revealed that security isn’t just about code, it’s about how people interact with that code. In the end, trust in technology often comes down to trust in humans.

How to Keep Your Crypto Safe Amid Conflict and Chaos

With crypto exchanges becoming pawns (and targets) in geopolitical games, what can ordinary users do to protect their assets? If even major platforms like Bybit or local institutions like Nobitex can be compromised by state actors, is any exchange safe?

These questions are now top-of-mind for crypto holders living in volatile regions – and indeed for anyone who entrusts funds to an exchange.

Here are two key strategies to consider:

1. Choose Non-Custodial Solutions and Self-Custody Your Assets.

The single best step you can take is to retain full control of your crypto whenever possible. The old adage “not your keys, not your coins” still holds true – if you leave your coins on a custodial exchange, you are inherently exposed to the risks that exchange faces (hacks, freezes, insider misconduct, etc.). We’ve seen how users of Nobitex lost access to funds because the exchange’s wallets were drained and locked up by hackers. By contrast, using a non-custodial exchange or wallet means you hold the private keys, and the service never actually holds your funds – it simply facilitates the swap or transfer. For example, platforms like ChangeNOW are non-custodial, so users maintain full command of their crypto holdings at all times.

Even as a non-custodial service, ChangeNOW “goes the extra mile” on security, but importantly it never takes custody of customer deposits. This model minimizes the single point of failure risk: even if ChangeNOW site were attacked or taken down, users’ funds would not be sitting in a vulnerable company wallet – they’d still be in the users’ own wallets. Self-custody does require more responsibility on the user’s part, but the trade-off is greater security against large-scale breaches. The market clearly leaned in this direction after past exchange failures: in the wake of the FTX exchange collapse, hardware wallet sales from Trezor and Ledger surged by hundreds of percent as investors moved en masse to self-custody. Even Binance’s CEO (before his downfall) admitted that if users can securely manage their own keys, “centralized exchanges will not need to exist, which is great”.
In conflict scenarios or crackdowns, having your coins in a personal wallet can be the difference between retaining access to your money or seeing it frozen or seized.

Bottom line: whenever feasible, keep your crypto in your own wallet, and use exchanges only for temporary conversions or transfers.

2. Favor Platforms with Strong AML Compliance and Security Track Records.

Another consideration, especially if you must use exchanges, is the platform’s stance on compliance and anti-fraud measures. It may sound ironic, but an exchange that actively works with law enforcement and implements strict AML/KYC checks can actually provide you more protection as a user. Why? Because such platforms are less likely to be havens for bad actors, less likely to face sudden shutdown by regulators, and often have systems to catch and mitigate hacks or scams.

For instance, ChangeNOW has built its reputation on robust AML mechanisms. If a suspicious transaction passes through, they will temporarily pause the swap and verify the user’s identity to ensure it’s legitimate. This isn’t just boxticking, it’s about ensuring stolen funds or sanctioned funds aren’t intermingling with users’ transactions. Yes, it can be an inconvenience if you get flagged by accident, but users report that the verification is generally quick and painless. The benefit is an added layer of safety: your funds are less likely to get mixed up with criminal or terrorist money that could put your account at risk.

Exchanges with serious compliance teams also tend to cooperate in recovering stolen assets. ChangeNOW, for example, has a dedicated team that will work with global law enforcement to freeze and return funds if a user is victimized by a hack or scam. There have been cases where they helped track down and return large amounts of stolen crypto, such as intercepting a $430,000 haul from a SIM-swap hacker and returning it to the victim, or halting $210,000 worth of a phishing victim’s $ETH that thieves were trying to launder through the platform. An exchange that “balances regulation with user interests” by staying on the right side of the law while protecting users, is going to minimize both external risks (e.g. being shut down or sanctioned by the government) and internal risks (e.g. being drained by hackers or insiders). In short, trustworthiness matters: in a crisis, you want to be using services that won’t vanish or entangle you in legal nightmares.

By focusing on self-custody and trusted, compliant services, the average crypto user can dramatically reduce the threats to their assets, even as global conflicts rage on. These steps won’t make your crypto invincible, but they tilt the odds back in your favor. Think of it like personal security in a warzone, you can’t stop a war, but you can choose a reinforced shelter over a flimsy tent.

The Road Ahead: More Scrutiny, More Resilience

Will crypto exchanges and assets become safer for regular users in the future, or will the era of hybrid warfare make things worse? The outlook is a mixed bag. On one hand, the very chaos and high-profile failures we’ve seen are prompting industry and governments to shore up defenses. Exchanges today are far more security-conscious than those in Bitcoin’s early days, many employ top-notch cybersecurity teams, conduct regular audits, and maintain insurance funds to cover hacks. Regulators, after initially lagging, are now paying close attention and pushing exchanges toward stronger compliance and consumer protections. This could lead to a more mature crypto ecosystem where major platforms are as robust as banks ( or at least closer to that standard).

On the other hand, greater regulatory pressure may also bring more centralization and oversight, which runs counter to crypto’s decentralized ethos. We’re already seeing consolidation: smaller or shadier exchanges are being weeded out, while a few big players gain dominance (often working closely with authorities). Paradoxically, this might reduce certain risks, like scams and money laundering, but increase others – notably, creating juicy single targets for hackers and making the whole system more dependent on a few “too-big-to-fail” exchanges. If, say, 80% of crypto flows through a handful of heavily regulated exchanges, a coordinated cyber-attack or insider compromise at one of them could have systemic effects.

We should also temper our expectations about human nature: as long as humans run these businesses, there will be human weaknesses to exploit. Greed, negligence, and coercion don’t disappear just because an industry is regulated. The case of Binance is illustrative.

Binance grew into the world’s largest exchange, but its meteoric rise was partly fueled by playing fast and loose with regulations. In 2023, Binance’s founder and CEO, Changpeng “CZ” Zhao, arguably the most powerful man in crypto at the time, was charged by U.S. authorities and later pleaded guilty to AML violations, acknowledging that Binance had failed to prevent money laundering on its platform. In 2024 he was sentenced to prison (albeit only 4 months, after a plea deal) and Binance paid over $4 billion in penalties. Prosecutors revealed that under CZ’s watch, Binance had effectively become a haven for criminals – processing transactions for terrorist groups like Hamas, Al-Qaeda, and ISIS, and even handling ransomware and child abuse material proceeds. This was a stunning fall from grace for a titan of the industry, and it underscores how the “human factor”, in this case, prioritizing growth over compliance – led to massive risk exposure. Binance’s saga (mirrored by the even more dramatic collapse of FTX and jailing of its CEO on fraud charges) suggests we’ll see more news of crypto CEOs facing legal sanctions for misconduct. The hope is that these busts serve as a cautionary tale that forces the next generation of exchanges to be far more accountable.

Meanwhile, state-backed hacking isn’t likely to abate. If anything, success breeds imitation. The audacity of North Korea’s $1.5B theft and the tactical strike by Predatory Sparrow in Iran may inspire other cyber units to target crypto infrastructures of their adversaries. Cyber warfare units globally have surely taken note that a well-timed exchange hack can deliver a geopolitical punch without a single missile fired. It’s asymmetric warfare at its finest, and worst. Therefore, crypto exchanges will need to continually harden their defenses, share threat intelligence, and perhaps even work with governments to anticipate and thwart state-sponsored attacks. We might even see “deterrence” strategies, where nations retaliate in kind or through sanctions when their exchanges are hacked by rivals.

For the everyday user, this all means the battle isn’t over. Staying safe with crypto will remain an active exercise. The industry is maturing, but the risks are evolving. Vigilance in choosing where you store your assets and staying informed about threats – will be key. Encourage exchanges you use to be transparent about their security and compliance. Keep your software (wallets, devices) updated against the latest threats. Treat sensational news of hacks or regulatory crackdowns as prompts to reassess your own setup.

In the era of hybrid warfare, your crypto assets sit at the intersection of finance and technology, and now, geopolitics. That’s equal parts exciting and daunting. Stay safe, stay informed, and never forget the core lesson: ultimately, your money is safest when it’s in your own hands. In a world of conflict, that might be the only thing you can truly control.

Author bio

Pauline Shangett is CSO at ChangeNOW, a non-custodial crypto exchange with more than $1B in monthly trading volume. She brings over 7 years of experience in blockchain, combining marketing, growth, and strategy across multiple stages of product and market development.

Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.

In the Crossfire: Are Your Crypto Assets Really Safe in the Era of Hybrid Warfare?

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In the Crossfire: Are Your Crypto Assets Really Safe in the Era of Hybrid Warfare?

War and Sanctions: An Unexpected Driver of Crypto Adoption

States Turn to Crypto to Evade Restrictions

Crypto Exchanges in the Crosshairs of Hybrid Warfare

The $1.5 Billion Bybit Heist: North Korea’s Crypto Offensive

How to Keep Your Crypto Safe Amid Conflict and Chaos

1. Choose Non-Custodial Solutions and Self-Custody Your Assets.

2. Favor Platforms with Strong AML Compliance and Security Track Records.

The Road Ahead: More Scrutiny, More Resilience

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