Russia Paid Teenage Spies in Bitcoin, Blockchain Forensics Reveal

Russian intelligence agencies are increasingly relying on Bitcoin to fund covert operations across Europe, including the recruitment of teenagers as spies.

Key Takeaways:

• Russian intelligence is using Bitcoin to fund covert operations, including the recruitment of teenage spies.
• Blockchain forensics traced espionage payments to wallets linked to the FSB, showing structured laundering patterns.
• This case is part of a broader trend, with crypto also used to finance propaganda and sabotage across Europe.

A Reuters investigation, conducted with blockchain forensics firms Global Ledger and Recoveris, has revealed how the Russian Federal Security Service (FSB) used crypto to finance espionage.

One case involved Canadian national Laken Pavan, who was just 17 when he was recruited by the FSB after traveling to Donetsk to join pro-Russian forces.

After several days in detention, Pavan was coerced into spying for Russia and assigned a handler known as Slon, Russian for “elephant.”

His instructions included traveling across Europe to collect intelligence, with payments sent in Bitcoin.

After receiving just over $500 in BTC while in Copenhagen, Pavan fled to Poland, where he turned himself in on May 22, 2024. He was later sentenced to 20 months in prison by Polish authorities.

The payment Pavan received was traced to two intermediary wallets by blockchain analysts, which had received significant funds from a larger wallet created in June 2022.

That wallet has since processed more than $600 million in Bitcoin, including transactions routed through Garantex, a sanctioned Russian crypto exchange.

JUST IN: Russia's central bank showcases #Bitcoin as the most profitable investment over the past year pic.twitter.com/y9MB4vyGAD

Global Ledger’s analysis found that the wallets linked to Pavan’s payments operated exclusively during Moscow business hours, pointing to a highly structured laundering network.

“Transactions from wallets linked to the FSB followed a structured laundering pattern, involving fund splitting, mixing with larger sums, and routing through unconnected deposit wallets,” Global Ledger said in its report.

The case is not isolated. According to Marcin Zarakowski, CEO of Recoveris, Russian intelligence has used Bitcoin to fund multiple covert operations.

“This method has been uncovered on multiple occasions,” he said, citing a 2023 case involving young Belarusians and Ukrainians who were paid in crypto by the GRU to install surveillance devices and spread propaganda in Poland. Some were even paid in BTC to commit acts of arson.

Recoveris has also identified a network of 161 Bitcoin addresses linked to the FSB, with hundreds of transactions occurring within 6 a.m. to 6 p.m. Moscow time.

Russia’s reliance on crypto extends to mercenary funding in Donbas and payments to European politicians for disseminating pro-Kremlin narratives.

As reported, Russia is exploring ways to use cryptocurrencies to settle grain export payments, as the country looks to bypass Western sanctions and modernize its trade infrastructure.

More recently, Russia’s central bank announced that it is allowing qualified investors limited access to crypto-linked financial products.

Under the new guidance, banks and financial firms can offer derivatives and securities tied to cryptocurrency prices, though these products must be non-deliverable and settled in fiat.

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