Ukraine is paying back Russia in its own crypto coin. Back in 2014, at the start of the Russo-Ukrainian War, pro-Russian separatists had accepted at least 68 Bitcoin donations that were channelled through Russian and other overseas banks.
As tensions mount in Ukraine, with more than 100,000 Russian troops positioned near the border, Ukrainians are crowdfunding cryptocurrency to fight back.
A number of Ukrainian non-governmental organisations (NGOs) and volunteer groups have been flooded with Bitcoin donations, a report by blockchain analytics company Elliptic showed.
Cryptocurrency donations jumped 900 percent to more than $570,000 in 2021 over the previous year. The NGO and volunteer groups used a number of cryptocurrency wallets to access the funds.
“Cryptocurrency is increasingly being used to crowdfund war, with the tacit approval of governments,” CNBC quoted Elliptic’s Chief Scientist Tom Robinson as saying.
Donations with a history
In the past decade, local NGOs have started securing financial support to augment the work of soldiers and volunteers amid government corruption. Legions of volunteers stepped up efforts to support protesters during the Maidan Revolution when Ukraine’s pro-Russian president Viktor Yanukovych was ousted in 2014.
These NGOs generally receive funds from private donors through bank wires or payment apps. In recent years, donors have taken the cryptocurrency route to funnel money to bypass banks and financial institutions that might block payments to Ukraine.
Activists have deployed the funds to equip the Ukrainian army with equipment, medical supplies and drones. They are also deploying funds to develop a facial recognition app that will help identify a Russian mercenary or spy.
NGOs in Ukraine that use cryptos
One such organisation, called ‘Come Back Alive,’ assists the military with equipment, training services and medical supplies. The group, which started accepting cryptocurrency in 2018, saw Bitcoin donations rise to $200,000 in the last six months of 2021.
Others groups, such as Ukrainian Cyber Alliance and Belarusian Cyber-Partisans, are hacktivists working on cyberattacks against Russian targets. Last year, the Ukrainian Cyber Alliance received nearly $100,000 in Bitcoin, Litecoin, Ethereum, and a mix of stablecoins.
Raising funds in crypto is advantageous as it is difficult to confiscate such assets, CNBC quoted Boaz Sobrado, a London-based fintech data analyst, as saying.
Learning from Russians
The Ukrainians are emulating the crypto asset fundraising technique that Russians used from the start of the Russo-Ukrainian War. In eastern Ukraine, pro-Russian separatists raised money by accepting crypto donations through a series of online campaigns. The donations were channelled through Russian and overseas banks. One such campaign, called ‘Save the Donbass,’ received at least 68 Bitcoin donations between 2014 and 2016.
Although cryptocurrency donations to Ukraine are soaring, it still makes up a small portion of the funding. The majority of funds still flow into Ukraine in fiat currencies through traditional payment systems.