Russia has been increasing its use of cryptocurrency for sanctions evasion, disinformation, and election interference, according to execs for leading blockchain analytics firm Chainalysis.
“Russia has become an international force using cryptocurrency for everything from sanctions evasion to ransomware attacks, and most recently, interference and disinformation campaigns targeting the US elections,” said Chainalysis chief marketing officer Ian Andrews during a talk shared on the company's YouTube channel on Oct. 1.
Valerie Kennedy—the firm’s Director of Intelligence Solutions—suggested that crypto use is a sign of desperation on Russia’s part since “in Russia's perfect world, they would have used a central bank digital currency.” Still, that sort of system has “been pretty slow to develop” forcing Russia “to use different types of cryptocurrencies instead for these types of payments.”
“Russia didn't want to make this decision,” she added.
Chainalysis Head of National Security Intelligence Andrew Fierman noted that new laws enable the Russian Central Bank to oversee and control cryptocurrency usage for cross-border transactions. The nation introduced "a bill to facilitate cross-border payments, particularly via cryptocurrency within Russia," he said, suggesting this move is a response to the sanctions imposed on Russia.
The experts discussed the rise of Russian-language, non-KYC instant exchange services. These platforms, often lacking corporate registration, allow real-time swapping of fiat currency to cryptocurrency and vice versa. Fierman explained that individuals can use these services to connect accounts from sanctioned Russian banks—effectively bypassing international sanctions.
“One of the things that I realized pretty early on is that people who are subject to sanctions aren't going to be overly willing to put their information through the know-your-customer process at a mainstream financial institution,” Fierman highlighted.
Kennedy suggested a more comprehensive approach to monitoring services connected to Russia, including deeper due diligence and open-source intelligence efforts.
"It's going to involve, for better or for worse, taking a more comprehensive look at any services coming out of Russia or in Russia-backed states," she said, pointing out that new exchanges can be set up easily and inexpensively, complicating enforcement efforts.
Russia’s disinformation tactics
Kennedy highlighted that Russian state-affiliated media firms have funneled millions of dollars into U.S.-based entities to spread propaganda. One example, reported by Wired, involved a Tennessee-based media company receiving nearly $10 million from RT (formerly Russia Today) to pay influencers who were allegedly unaware of the Russian backing.
Additionally, they said, bot networks on platforms like Twitter have been used to amplify Russian narratives.
These networks often use compromised or bulk-purchased social media accounts, some obtained through platforms like UBAStore. Kennedy noted that such accounts can be bought for as little as 10 cents each, facilitating large-scale disinformation efforts.
The experts also discussed the role of Telegram in facilitating illicit communications and transactions. Fierman mentioned that while Telegram is used by various groups, it has become a platform for activities like fundraising for militia groups using cryptocurrency.
The report follows the late August arrest of Telegram co-founder and CEO Pavel Durov’s arrest in France over charges tied to alleged illegal conduct by Telegram users. As Decrypt reported earlier this month, many in the crypto community have speculated that the arrest is more related to crypto than it would appear to be at first glance.
With upcoming elections in the United States and other countries in 2024, the experts stressed the importance of heightened vigilance. Kennedy warned that Russia's tactics are not limited to the U.S., citing interference efforts in Moldova and across Europe.
“We're seeing similar types of efforts from China and Iran,” Kennedy said. "Russia is just the loudest and possibly most pervasive in this space, but we're certainly seeing these types of efforts globally," she said, underscoring the need for international cooperation in addressing these challenges.
Edited by Stacy Elliott.