Groups linked to Russia and Iran are using cryptocurrency to finance the purchase of low-cost military drones and components, according to blockchain analytics firm Chainalysis.
Commercially available drones are central to conflicts in Ukraine and the Middle East. While most purchases use traditional finance, procurement networks are increasingly intersecting with the blockchain.
Chainalysis researchers traced crypto from wallets connected to drone developers or paramilitary groups to purchases on e-commerce sites. Since Russia's 2022 invasion, pro-Russia groups have raised over $8.3 million in crypto donations, with drones among the specifically itemized purchases.
"On the blockchain, there's this incredible opportunity to see the counterparty activity and assess the intent behind the purchase," said Andrew Fierman, Chainalysis's head of national security intelligence.
The report found Iran-linked groups are also using crypto to procure drone parts and sell military equipment. It highlighted a crypto wallet connected to Iran's Islamic Revolutionary Guard Corps purchasing parts from a Hong Kong-based supplier.
While the total crypto volume for drone procurement remains small, the blockchain provides investigators a transparent trail for purchases that would otherwise be murky.