State and non-state actors linked to Russia and Iran are increasingly using cryptocurrency to acquire low-cost, commercially available drones for ongoing conflicts, a new report published on Monday said.
Sanctioned entities, including Iran’s defense sector and aligned proxies, are turning to cryptocurrency to procure drone components restricted by export controls, according to a new study by blockchain analytics firm Chainalysis.
Iran’s Shahed drone program, widely deployed in the ongoing conflict with the U.S. and Israel, relies “heavily” on components sourced through third-country procurement networks, the report added.
The report said that the trend was observed during the early stages of Russia’s invasion of Ukraine in 2022, with pro-Russia organizations raising over $8.3 million in cryptocurrency across various blockchains to explicitly buy drones from e-commerce platforms.
Alibaba didn’t immediately return Benzinga’s request for comment.
Meanwhile, Russia has also been reported to transfer battle-tested drone technology to Tehran amid the ongoing war. This includes the use of Iranian licensing to scale production and the transfer of drones, with Russian-provided information embedded in them, used by Iran during regional strikes.
Iran isn’t new to using cryptocurrency as a tool to circumvent Western financial sanctions.
A January report revealed Iran’s Ministry of Defence Export Center, or Mindex, has been open to negotiating military contracts that allow payment in digital currencies.
Price Action: Alibaba shares fell 0.48% in after-hours trading after closing 0.58% lower at $121.98 during Monday’s regular trading session.
Alibaba stock showed weaker price trends across short, medium, and long terms, yet earned a high Value Score in Benzinga’s Edge Stock Rankings.
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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Cryptocurrency facilitates procurement in two ways, according to Chainalysis. The first is direct, where a drone manufacturer accepts cryptocurrency as a payment method. The second is indirect, where vendors selling through third-party e-commerce platforms, such as Alibaba Group Holding Limited (NYSE:BABA), accept cryptocurrency for selling drones and drone parts to buyers with “opaque” identities and intentions.
Iran pivoted to Bitcoin (CRYPTO: BTC) mining and also signaled plans to regulate cryptocurrency, aiming to "eliminate negative impacts while leveraging positive effects" of digital currencies.
