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Russia is weaponizing blockchain technology and cryptocurrencies to evade sanctions, finance its war and procure military equipment, according to an Elliptic analysis.
In our new report “Crypto in Conflict”, we were able to directly link more than 22 million crypto addresses to criminal activity in Russia.
Within these addresses are wallets that we can prove are being used to collect donations for the Russian military and associated mercenaries currently active in Ukraine.
Elliptic’s report pulls back the curtain on state-sponsored crime. It exposes how Russia’s war is supported by a vast cybercriminal infrastructure of ransomware groups, dark web marketplaces, sellers of stolen data, disinformation, hackers and cryptocurrency payment services.
We also uncover profiles of the specific networks that facilitate them, along with their activities and intentions “off-chain”. Our findings – which include the glorification or incitement of war crimes, crimes against humanity, the use of nuclear weapons and anti-Semitic or homophobic rhetoric – are of great concern, particularly to defence, police and government agencies tasked with detecting and disrupting organized crime.
It is critical to acknowledge this reality in order to assess the true picture of the national security threats posed by such groups, particularly in terms of thwarting their cryptocurrency fundraising efforts and stemming the flow of funds to Russia.
Many of these cybercrime campaigns use the latest developments in the crypto ecosystem to help raise funds – including decentralized finance (DeFi), non-fungible tokens (NFTs) and crypto pre-paid cards.
Identification of sanctioned actors
There remains a real risk that Russia uses cryptoassets to circumvent sanctions through state-sponsored cybercrime, wealth concealment, and even cryptocurrency mining.
Inside the report, we dig deeper into the sanctioned actors based in Russia. Our analysis goes beyond those on global sanctions lists to include their associated associates, which we have been able to identify through our proprietary data collection methods and tracking technology.
Although its traceability and the inherent transparency of blockchain transactions serve as a key mitigation, crypto is not a silver bullet against sanctions. Both Iran and North Korea have shown how cryptocurrencies can be used to reduce their influence. When countries face serious sanctions, they will look for any and all means to raise funds and avoid restrictions.
How to win the crypto crime arms race?
Where there is crypto-crime, there is a trail to follow, no matter how inventive criminals become in exploiting new innovations – such as the use of cross-bridges – to hide their tracks.
These new innovations do not have to be weak links. As an industry – in partnership with law enforcement, intelligence and defense – we have the tools and knowledge to detect and prevent digital assets from becoming havens for money launderers, kleptocrats and warlords.
Elliptic’s investigators and threat analysts constantly monitor and track illegal use of cryptoassets, and may share their insights with government agencies. Our recent work with Binance and Huobi—resulting in the seizure of funds stolen by North Korean hackers (despite their intense efforts to first conceal them)—illustrates these possibilities.
Want to see a live demo or start a trial?
Our financial crime threat intelligence generated by Russia’s invasion of Ukraine is now available to Elliptic clients through our powerful, hands-on investigative tools.
If you want to join us in our mission to fight financial crime in cryptocurrency, we can enable you to quickly find the evidence you need or support your findings with our blockchain intelligence.
Founded in 2013, we pioneered the use of blockchain intelligence to help public and private sector organizations fight financial crime in crypto. Since then, we have evaluated transactions worth several trillion dollars, and our Russia-Ukraine report is one important example of that work.
Contact us here to request a live demo or learn more here.
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