Soldiers from Russia’s Eastern Military District attend a welcome ceremony when they arrive at unfamiliar training grounds in Belarus, combining their own vehicles with train travel to participate in a joint military exercise conducted by the Union of Russia and Belarus. simulates repelling an external attack on its border, cutting off possible supply lines for invaders, and detecting, limiting, and eliminating their combat and subversive units.
Russian Ministry of Defense TASS | Getty Images
As more than 100,000 Russian troops gather on the border with Ukraine – and global forces are working to prevent a total war between the two countries – new figures show that Ukrainians are funding bitcoins to fight.
Hundreds of thousands of dollars in donations have invaded Ukrainian NGOs and volunteer groups, according to a report by Elliptic, which sells blockchain analysis tools to banks and some of the world’s largest cryptocurrency platforms, including Binance and Circle.
Activists have used the crypto for a variety of purposes, including equipping the Ukrainian army with military equipment, medical supplies and drones, and funding the development of a face recognition application that identifies someone as a Russian mercenary or spy.
“Cryptocurrency is increasingly being used for war on crowdfunding, with the tacit approval of governments,” said Tom Robinson, Elliptic’s chief scientist.
Although Russia says it has no plan to launch an offensive, the United States, the United Kingdom and others have sent preventive military equipment to Ukraine to help prepare for a possible invasion.
Ukrainian tanks drive during tactical exercises at a test site in the Kherson region, Ukraine, in this photo, published on February 7, 2022.
Press service of the Ukrainian Armed Forces through Reuters
Without borders and resistant to censorship
For years, volunteer groups have been increasing the work of the Ukrainian military by offering additional resources and manpower. When pro-Russian President Viktor Yanukovych was ousted in 2014, for example, legions of organized volunteers stepped up to support the protesters.
These organizations typically receive funds from private donors through bank transfers or payment applications, but cryptocurrencies such as bitcoin have become more popular as they allow them to bypass financial institutions that may block payments to Ukraine.
“Cryptocurrency is particularly suitable for international fundraising because it does not respect national borders and is resistant to censorship – there is no central body that can block transactions, for example in response to sanctions,” said Robinson of Elliptic.
“The advantage of raising funds in cryptocurrencies is that they are much harder to confiscate,” said Boaz Sobrado, a London-based fintech data analyst who has advised charities in authoritarian countries, including former Eastern bloc countries, on fundraising.
According to the Elliptic report, volunteer groups and NGOs have raised just over $ 570,000 in cryptocurrency. Much of this cryptocurrency has been received in the last year.
Elliptic software is sometimes used to investigate criminal activity in the Bitcoin digital book and to monitor anti-money laundering transactions. For this report, Elliptic identified a number of cryptocurrency portfolios used by volunteer organizations in Ukraine to track where and how crypto funds are used.
One such group, Come Back Alive, which began accepting cryptocurrency in 2018, provides military equipment, training services and medical supplies. The group says it saw a jump in bitcoin donations to $ 200,000 in the second half of 2021.
Another group, the Ukrainian Cyber Alliance, says it raises money exclusively in cryptocurrency. Last year, the group received nearly $ 100,000 in bitcoins, lightcoin, ether and a mix of stablecoins. Since 2016, Alliance activists have been involved in cyber attacks against Russian targets, says Elliptic.
“Their operations include attacks on propaganda sites, the Russian Ministry of Defense and various individuals linked to Russia’s activities in Ukraine. It is reported that the intelligence gathered during these operations is shared with Ukrainian law enforcement and intelligence agencies.” says the report.
The Kiev-based NGO Myrotvotrets Center has been taking cryptocurrency donations since 2016 and is currently working on a face recognition application that will be able to identify “extremists, Russian mercenaries and war criminals” based on a photo.
The organization – which says donations to its cause have come from more than 40 countries – has already published information on people considered “enemies of Ukraine.”
So far, the Myrotvotrets Center says it has raised at least $ 267,000 through more than 100 bitcoin donations.
Border guards and soldiers are seen during the construction of a border wall on the Polish-Belarusian border in Tolce, Sokolka County, Podlaskie Voivodeship, in northeastern Poland on January 27, 2022.
Wojciech Radwanski AFP | Getty Images
Ukrainian activists are not the only ones leaning towards crypto.
Pro-Russian separatists have been raising funds in bitcoins since the early days of the Russian-Ukrainian conflict. Sobrado told CNBC that some Russian officials had mentioned that they were not closing opposition bank accounts for “fear that they would be forced to raise funds from crypto, which is much more difficult to monitor.”
Sobrado went on to say that there is a long history of fundraising from crypto for controversial causes, from WikiLeaks to Russian opposition politician Alexei Navalny, who also raises funds in bitcoin.
The embrace of Ukraine on crypto
For months, Ukraine has been taking steps to adopt cryptocurrencies at the national level.
Ukrainian President Vladimir Zelensky signed a law in 2021 that paved the way for the country’s central bank to issue its own digital currency.
The president and parliament are also moving back and forth on a law that will legalize and regulate cryptocurrency. If the measure is approved, it will raise the cryptocurrency from the legal gray area where it is currently located, although it will not reach El Salvador, which adopted bitcoin as legal tender in September.
During an official state visit to the United States in August 2021, Zelensky spoke of the nascent “legitimate innovative virtual asset market” in Ukraine as a point of sale, and Digital Transformation Minister Mikhail Fedorov said the country was modernizing its payments market. so that the national bank will be able to issue digital currency.
This year, the country plans to open the cryptocurrency market for businesses and investors, according to the Kyiv Post. Senior government officials are also promoting their crypto street trust to investors and venture capital funds in Silicon Valley.
However, the war with Russia could make all these plans controversial.
