Russian intelligence recruits teen spies and pays them in Bitcoin

An investigation by Reuters in collaboration with two blockchain analysis companies, Global Ledger and Recoveris, has revealed that Russian intelligence agencies are using Bitcoin to pay teenage and inexperienced spies.

A notable case is Laken Pavan, a Canadian citizen who was sentenced to 20 months in prison in Poland last December after pleading guilty to espionage for Russia. According to reports, Pavan was recruited by the Federal Security Service of the Russian Federation (FSB) in late April 2024, when he was just 17 years old. Previously, Pavan had been radicalized online in 2023 and traveled to Donetsk to join the pro-Russian volunteer forces known as Interbrigades.

In Donetsk, Pavan was arrested and threatened by FSB agents, forcing him to become a spy. He was then assigned to a commander with the codename "Slon" ( which means "elephant" in Russian ). Pavan's mission is to travel to various locations across Europe, including Ukraine, to gather intelligence and relay it back to Slon.

On the journey from Donetsk to Istanbul and then to Copenhagen, Pavan received a payment of more than 500 USD in Bitcoin from Slon. However, just one day later, on May 22, when he arrived in Warsaw, Pavan voluntarily turned himself in to the Polish authorities – ending his brief "career" as a spy.

An undated photo shows Laken Pavan standing next to a military vehicle. His mother said he has been obsessed with the military since childhood | Source: Andelaine Nelson/ ReusterAlthough the incident ends here, analysts at Global Ledger and Recoveris have traced the flow of 500 USD in Bitcoin that Pavan received. This amount came from two intermediary wallets, which had previously received hundreds of thousands of USD in Bitcoin from a large wallet created in June 2022.

Analysis shows that transactions with these wallets mainly occur during business hours in Moscow. The total amount of Bitcoin processed through the largest wallet reaches 600 million USD, including transfers to the Garantex exchange – which has already been sanctioned. Global Ledger states that this wallet may be funded by a large mining operation and a cryptocurrency custody service.

While it is not possible to determine for sure who is behind the wallets, both Global Ledger and Recoveris suspect they are directly connected to the FSB. According to the Global Ledger, transactions involving the FSB show clear signs of money laundering, including segregation of funds, mixing with large transactions, and passing through multiple unrelated wallets to conceal the origin.

Russian cryptocurrency spy network

Although Laken Pavan is just one of many cases, the company Recoveris stated that they have observed Russian intelligence and security agencies continuously using cryptocurrency to fund the activities of agents.

Mr. Marcin Zarakowski, CEO of Recoveris, said: "This method has been discovered many times. For example, in 2023, a group of Belarusian and Ukrainian youths in Poland was found to be receiving cryptocurrency from the Russian military intelligence agency (GRU)."

The tasks of this group include: installing cameras along the main railway line from Poland to Ukraine, painting political propaganda slogans aimed at causing social division, and spreading fake news.

Since then, many cases of cryptocurrency payments from FSB and GRU have been detected in Poland – even including expenses for acts of arson.

Zarakowski revealed: "We see wallets related to the GRU/FSB operating frequently, almost always trading during business hours in Moscow, from 6 AM to 6 PM."

In addition to funding spies, Russia also uses cryptocurrency to pay mercenaries in Donbas, and even bribes European politicians to spread pro-Russia and anti-Ukraine views.

With the extensive economic sanctions being applied against Russia, many experts believe that agencies like the FSB will continue to leverage cryptocurrency in the near future.

Zarakowski emphasized: "The advantage of cryptocurrencies like Bitcoin is that they allow for the transfer of any amount of money, even millions of USD, instantly and bypassing government control barriers – except for the phase of conversion to fiat currency."

Moreover, the transparency of blockchain also helps Russia closely monitor the spending activities of its agents.

"Senior officers can track the flow of money on the blockchain and check whether the expenditures serve operational purposes," he said. Russian intelligence recruits teenage spies and pays them in Bitcoin.

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