Coins and Conflict: How crypto fuels the modern battlefield

Once hailed as a revolutionary tool for financial independence, cryptocurrency is increasingly emerging as a powerful — and controversial — instrument in modern warfare. From funding North Korea’s ballistic missile program to supporting militant groups in Gaza, digital assets are being leveraged to bypass sanctions, obscure financial trails, and fuel military operations worldwide.

The very features that make cryptocurrencies appealing to activists and citizens in crisis zones — decentralization, anonymity, and borderless transfers — also make them attractive to regimes and organizations seeking to evade international oversight. Today, crypto serves as both a lifeline for those in need and a covert pipeline for financing weapons, drones, and other instruments of war.

North Korea’s Crypto-Fueled Weapons Program

The most alarming example of crypto’s use in weapons development comes from North Korea’s nuclear ambitions. The Lazarus Group, a state-backed hacking unit, has stolen billions from cryptocurrency exchanges over the years. Their most audacious heist — the theft of $1.5 billion from the ByBit exchange — saw 20% of the funds vanish into untraceable wallets.

Cybersecurity experts, including Elliptic’s Tom Robinson, credit the group’s success to exceptional technical skill, years of operational experience, and ruthless efficiency. While exact figures remain classified, sources suggest that roughly 40% of the stolen funds go toward advancing North Korea’s ballistic missile program, providing the regime with a financial lifeline despite heavy sanctions.

Crypto as a War Chest in the Ukraine–Russia Conflict

The Russia–Ukraine war has further highlighted crypto’s role in funding military operations.

In Ukraine, President Volodymyr Zelenskyy signed the “On Virtual Assets” law in March 2022, creating a legal foundation for crypto use and allowing the country to raise global donations more effectively. By August 2022, officials confirmed spending $54 million in crypto donations on helmets, body armor, optics, and weapons. However, tracking exact holdings remains complex. While some reports exaggerated Ukraine’s Bitcoin reserves at 46,000 BTC, this figure reflects pre-war personal holdings of officials rather than the state’s current reserves.

Russia, meanwhile, has tapped crypto both to sidestep sanctions and to receive direct funding for its armed forces. A July 2022 Chainalysis report identified 54 pro-Russian groups that raised $2.2 million for drones, weapons, and protective gear — some of which were already under sanctions.

Hamas also uses cryptocurrency to solicit funding, though U.S. authorities routinely seize wallets linked to these operations, classifying such donations as terrorism financing.

Tech Firms and the Crypto–Warfare Nexus

The growing intersection of crypto, data, and defense technology has attracted major players like Palantir. Founded in 2003, the Denver-based analytics firm has long been a partner to the U.S. Army and various intelligence agencies. While Palantir began accepting Bitcoin payments in 2021, it has yet to hold the asset on its balance sheet despite speculation from industry watchers.

Palantir’s chairman and co-founder, Peter Thiel, is a vocal cryptocurrency advocate with significant investments in the sector, including a stake in Bitmine and ownership of the crypto exchange Bullish, which is currently pursuing a $4.23 billion IPO. The firm’s technology has been deployed in conflict zones, including Ukraine and Israel, and was recently awarded a decade-long, $10 billion contract with the U.S. Army.

Despite criticism over its role in surveillance and policing, Palantir’s growing influence and its leadership’s crypto ties have led some to believe the company could integrate Bitcoin more fully into its strategy in the future — a move that could further intertwine digital assets with global military and intelligence operations.