Russia, Iran-Linked Groups Turn To Crypto For Crowdfunded Drone Purchases – Report

A recent report has shared that Pro-Russia and Iran groups are turning to crypto to fund purchases of commercially available drones and related components, as the products become central to modern conflict.

Crypto-Funded Drone Purchases Linked To Russia, Iran

On Monday, blockchain analytics firm Chainalysis revealed that groups affiliated with Russia and Iran are utilizing crypto to fund the acquisition of low-cost military drones and their components.

The firm traced crypto flows from individual wallets linked to various paramilitary groups to the purchase of affordable drones and related components from vendors on e-commerce platforms.

According to the report, low-cost, commercially available drones have become central to modern conflict, enabling both state and non-state actors, including pro-Russia militias and Iran-backed terrorist organizations.

Most purchases use traditional financial channels, but Chainalysis noted that drone procurement networks are ⁠increasingly intersecting with the blockchain. As the firm explained, crypto can enter the drone procurement picture directly or indirectly. In the first scenario, a drone manufacturer openly accepts digital assets as payment on its website.

In the second scenario, electronics and dual-use component vendors that sell through third-party e-commerce platforms like Alibaba accept digital assets to sell drones and their parts to buyers whose identities and intended use are unclear.

The report found that Iran-linked groups have been using crypto to acquire drone components and sell military equipment, highlighting a wallet associated with Iran’s Islamic Revolutionary Guard Corps (IRGC) that purchased drone parts from a Hong Kong-based supplier.

As reported by Bitcoinist in January, Iran’s Ministry of Defence Export Center (Mindex), the state arms export arm, openly offered to accept crypto as payment for military hardware, including drones, air defense systems, warships, and ballistic missiles.

Paramilitary Groups ‘Crowdfund The Frontline’

Chainalysis also emphasized that the “most publicly visible crypto-drone nexus operates at the militia level, through open crowdfunding campaigns on social media platforms.”

The blockchain analytics firm has identified dozens of pro-Russia volunteer and paramilitary organizations asking for crypto donations for military equipment since Russia invaded Ukraine in ​2022.

Over the past four years, the pro-Russia groups have raised more than $8.3 million in these donations across various blockchains to purchase drones and associated components from global e-commerce platforms.

On-chain evidence shows Russian militia fundraising groups purchasing from a Hong Kong-based drone manufacturer and drone purchasers acquiring liquidity from Russian-language no-Know Your Client (KYC) exchanges, the sanctioned Russian exchanges Garantex and Grinex, and a Federation Tower-based OTC service.

To the firm, this strongly suggests that Russia-linked actors may have acquired drones from Chinese manufacturers for deployment in Ukraine. Chainalysis also matched crypto transactions between $2,200-$3,500 to the exact prices of drones and their components on ​e-commerce platforms. 

“The striking point is not the dollar figure, but the logic. At the militia level, low-cost commercial drones are among the most tactically significant items crowdfunded crypto can buy,” the report affirmed.

“At $2,200–$3,500 per unit, a single successful fundraising campaign translates directly into battlefield capability for groups that cannot access conventional finance,” it continued.

The firm underscored that the blockchain offers new opportunities to trace these flows and obtain a better understanding of how emerging technologies are “transforming the economics of conflict.”

“On the blockchain, there’s this incredible opportunity, once you have ‌identified the ⁠vendor to see the counterparty activity and make assessments that help clarify that utilization and the intent behind the purchase,” Andrew Fierman, Chainalysis’s head of national security intelligence, told Reuters