Around US$23m raised via crypto to fund Ukraine's defence efforts

Singapore

CRYPTO donations to the Ukrainian government and non-government organisations (NGOs) supporting the military have surged since the Russian invasion last Thursday (Feb 24).

According to data from blockchain-analysis provider Elliptic as at Feb 28, the government and NGOs have raised US$22.8 million through over 24,000 crypto-asset donations in 5 days.

This includes a single donation worth US$1.86 million, which "appears to have originated from the sale of NFTs (non-fungible tokens) originally intended to raise funds for Julian Assange", Elliptic said, referring to the Wikileaks founder who is wanted in the US over the publication of thousands of classified documents in 2010 and 2011.

Ukraine's government had on Feb 26 taken to Twitter to crowd fund via crypto.

"Stand with the people of Ukraine. Now accepting cryptocurrency donations. Bitcoin, Ethereum and USDT," it wrote in a tweet which also contained addresses for its crypto wallets.

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Come Back Alive, a Ukrainian NGO which supports the military, has also received several million dollars in crypto donations, Elliptic said. This comes after crowdfunding platform Patreon said on Feb 25 that it had removed the NGO's page due to policy violations - specifically, that the platform does not support funding for weapons or military activity.

Cryptocurrency is suitable for cross-border donations, allowing easier access to wealthy overseas donors, Elliptic said in a blog on its website earlier this month.

"They allow quick, cross-border donations, which bypass financial institutions that might be blocking payments to these groups," it wrote in a recent update.

By appealing for crypto-asset funding, Ukrainian volunteer groups are actually "emulating" techniques previously employed by Russia. As early as 2014, supporters of pro-Russia separatists have launched online campaigns to raise money for war in eastern Ukraine. These campaigns also accepted crypto-asset donations.

One of these groups, Save the Donbass, received at least 68 bitcoin donations between 2014 and 2016, according to Elliptic.

To date, about 56 per cent of the crypto donations to the Ukrainian government and NGOs have been in bitcoin, while some 32 per cent were in ether. About 11 per cent are in the form of stablecoins.

However, bad actors have also been exploiting the situation by tricking unsuspecting donors. Elliptic said it has identified a number of fraudulent "fundraising" scams.

Other nation states have also turned to fundraising via crypto.

Iran, for instance, has used bitcoin mining to evade sanctions. Based on Elliptic's research, Iran-based miners are paid directly in bitcoin, which will then be used to pay for imports, thereby circumventing trade embargoes.

North Korea is believed to have stolen US$50 million between 2020 and mid-2021 from 3 crypto exchanges in North America, Europe and Asia to fund its nuclear and missile programmes, United Nations' experts said in a report quoting cyber specialists.