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.
Blockchains Powering Drone Warfare?
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.
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.
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’s Crypto Push Amid Sanctions
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.
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.
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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