Regulators trying to blacklist crypto wallets are in a race they are mathematically guaranteed to lose.
Analysis of all 173 OFAC-sanctioned Ethereum wallets reveals that 71% of funds escape before they can be frozen because wallet creation is free and instant while legal enforcement is bandwidth-constrained. The study proves that even if investigation time were reduced to zero, the architectural asymmetry of decentralized finance makes full enforcement impossible.
Enforcement Speeds In DeFi: Limits to a Race Against Time
SSRN · 6348398
Retrospective blacklist enforcement fails structurally in permissionless systems: adversaries create wallets offline at negligible cost while enforcement designates addresses on-chain at finite bandwidth, an asymmetry no improvement in investigation speed can resolve. We document this using the complete population of 173 OFAC-sanctioned Ethereum wallets. Across approximately $3.3 billion in total wallet value, we document two structural enforcement failures. First, approximately 71% of value, eq