The two sides of crypto in Ukraine war
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Loading... - Flavia Donato
- 11 Apr 2023
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Crypto’s impact on geopolitical issues does not often make for uplifting reading. The US, for example, fears digital assets can offer actors under sanctions a fresh means of skirting the financial system.
But the war in Ukraine has showed that the use of crypto in international affairs is far more nuanced and complicated. Blockchain data analytics company Elliptic shared data with the FT showing private crypto fundraising for pro-Ukrainian causes has outpaced Russian equivalents by a rate of 44 to one in the last year.
In total, more than $200mn worth of crypto has made its way to what have been described as pro-Ukraine causes. Over $80mn worth of these funds was sent directly to the Ukrainian government.
Just weeks after the invasion, a Ukrainian politician said crypto had helped supply its armed forces with supplies including bulletproof vests, helmets and walkie talkies. Other funds turned to humanitarian causes, and even journalism and intelligence efforts.
Not only do these funds eclipse the less than $5mn sent to pro-Russian entities, it represents at least one-fifth of overall non-state-mandated aid to Ukraine, marking the first time in history crypto has played a significant role in a major conflict.
“Ukraine bet big on crypto by offering donation addresses literally hours after the invasion, and it did pay off,” said an Elliptic analyst who spoke to me on the condition of anonymity. “Twenty per cent of grassroots funds coming from crypto is no small feat,” they added.
If you have subscribed to this newsletter for some time, you’ll recall only a few weeks ago I questioned crypto’s utility as a force for good, as hard-to-spend crypto tokens poured into Turkey and Syria in the days after the region’s tragic earthquake. But in Ukraine, crypto has shown to have some social utility.
So can crypto claim to be a force for legitimate good? Possibly but as crypto fans also say, the technology is neutral and can be used in a multitude of ways.
Of the near-$5mn worth of crypto donated to pro-Russian entities, more than half of those funds were dedicated to military fundraising, and most originated from exchanges and mixing services — a particular slice of crypto technology to have raised the ire of western governments in recent months.
These groups often provide spending reports on messaging platform Telegram. Elliptic estimates that MOO “Veche” — a military fundraising group active in the Donbas — has received roughly $1.8mn in bitcoin, which would make it the wealthiest pro-Russian fundraising group by crypto holdings. Read More…
