How Crypto is Funding Spy Rings Across Europe

European security agencies are uncovering a growing trend they once considered unlikely: intelligence operations funded not through secret bank accounts or cash drops, but through crypto. Yes, a full crypto spy operation in Europe. UK authorities revealed that Russian intelligence services used a cash-to-crypto laundering system to finance covert activities across Europe, marking a significant shift in how modern espionage is paid for.

According to the UK’s National Crime Agency (NCA), one of these networks, known as “Smart” and operated by Russian businesswoman Ekaterina Zhdanova, helped channel funds to a spy ring connected to Jan Marsalek, the fugitive former Wirecard executive with longstanding ties to Russian intelligence. Marsalek allegedly spent more than £45,000 supporting a group of six Bulgarian nationals later convicted in London for spying on journalists, monitoring political targets, and plotting potential assassinations.

In today’s #vatniksoup, I’ll introduce an Austrian fugitive businessman and Russian operative, Jan Marsalek (@derJanMarsalek). He’s best-known for the Wirecard scandal, and for funneling money to Russian intelligence agencies and PMC Wagner’s operations.

1/18 pic.twitter.com/4zp1kmVjKq

— Vatnik Soup (@P_Kallioniemi) December 19, 2023

Zhdanova, now in pre-trial detention in France, and another network known as TGR provided high-liquidity crypto services using Tether’s stablecoin, enabling clients to move large volumes of money with minimal traceability.

The networks allegedly serviced a wide criminal and geopolitical customer base: from Russia Today’s UK arm, to the Kinahan cartel, to individuals linked to Russia’s security apparatus.

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Teenage Recruits, Bitcoin Transfers, and Europe’s New Espionage Landscape

The funding of spy activity via crypto is no longer limited to career agents or professional operatives. European officials say Russia has increasingly turned to inexperienced recruits, including teenagers, after the mass expulsion of Russian diplomats in 2022 severely weakened its on-the-ground networks.

One of the clearest examples is the case of Laken Pavan, a Canadian teenager who was recruited in Russian-occupied Donetsk and instructed to gather information on the Polish military. Court documents reveal he communicated with his FSB handler through Telegram and received Bitcoin transfers, sometimes as little as $130, to support his movements across Europe. Blockchain analysis later traced more than $600 million through the upstream wallets tied to his case.

Pavan ultimately panicked, turned himself in, and cooperated with authorities. He was sentenced in Poland to 20 months in prison, far lower than typical espionage penalties due to his age and limited involvement. Still, security officials say the case provides a rare, unfiltered look at how cryptocurrency facilitates low-cost, low-skill espionage operations across EU states.

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Russian Laundering Networks and the Rise of the ‘Crypto Spy’ Model In The Balkans

Beyond high-profile intelligence cases, the Western Balkans illustrate how criminal groups and state-linked actors exploit weak regulatory frameworks to move crypto undetected. While Serbia and Albania have adopted stronger laws and collaborated with blockchain analytics firms, most neighboring countries lack the expertise, legal clarity, and coordination needed to trace or confiscate illicit digital assets.

Only three major crypto seizure cases have been documented in the region despite widespread usage in drug trafficking, fraud, darknet markets, and money laundering. This lack of oversight makes the region an attractive corridor for networks seeking to quietly transfer digital wealth—including, security officials warn, the same structures that can help finance espionage.

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Key Takeaways

Russian intelligence increasingly relies on a “Crypto Spy” model, using crypto-laundering networks like Smart and TGR to covertly fund espionage operations across Europe.
Untrained recruits and teenagers are being financed through crypto, revealing how digital assets now enable low-cost, hard-to-trace spy activity across the continent.

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