The war in Ukraine has become a major battleground for cryptocurrency donations, with over $70 million raised by donors since the conflict began in February 2022. According to data from blockchain analytics firm Chainalysis, the majority of these funds have come in Ether (ETH), Bitcoin (BTC) and other cryptocurrency forms.
ETH donors led the way, giving an impressive $28.9 million to the cause. BTC and Tether (USDT) were also used, with $22.8 million donated in BTC and $11.6 million sent in USDT.
These donations have been used to fund military equipment and humanitarian assistance in Ukraine, and have been an essential source of funding for the country during the conflict.
Deputy digital minister Alex Bornyakov explained in an interview with Yahoo Finance on Feb. 24 that the speed of cryptocurrency payments allowed the country to respond quickly to the invasion, as traditional financial systems would have taken days to process.
“If we used the traditional financial system it was going to take days […] We were able to secure the purchase of vital items in no time at all via crypto, and what is amazing is that around 60% of suppliers were able to accept crypto, I didn’t expect this.”
According to reports by Yahoo Finance, 80% of the total $70 million donated came in the first few months after the war started. The success of the Crypto Fund Aid For Ukraine showcases how cryptocurrencies can aid humanitarian and defense efforts.
Alona Shevchenko, co-founder of Ukraine DAO, a decentralized autonomous organization, asserted to Yahoo Finance that while restrictions were placed on the Ukrainian banking system, cryptocurrencies presented an answer:
“The central bank introduced limits on foreign currency transfers in and out of Ukraine to stop the run on the hryvnia […] Thanks to crypto we were able to cover some of our defenders’ immediate needs, there was literally no other way at the time.”
Furthermore, the fundraising efforts of UkraineDAO demonstrated the potential of nonfungible tokens (NFTs) in fundraising efforts. The auction of a Ukrainian flag NFT by UkraineDAO, raised $6.1 million, demonstrating the potential for NFTs to be used for charitable purposes.
Mykhailo Fedorov, who serves as Ukraine’s Vice Prime Minister and Minister of Digital Transformation, shared in an August tweet that a significant portion of the cryptocurrency payments received by the digital ministry were allocated to fund essential military equipment, protective clothing, various vehicles, and medical supplies.
With $54 M raised by @_AidForUkraine, we've supplied our defenders with military equipment, armor clothes, medicines and even vehicles. Thanks to the crypto community for support since the start of the full-scale invasion! Donation by donation to the big victory. Report below. pic.twitter.com/lifHAP8R4f
— Mykhailo Fedorov (@FedorovMykhailo) August 17, 2022
Despite these challenges, the increased reliance on cryptocurrencies in Ukraine has boosted adoption in the country, with Ukrainians ranking third-highest in crypto adoption behind Vietnam and the Philippines.
However, the conflict has also seen pro-Russian military groups using cryptocurrencies to fund their war efforts. Chainalysis reported that 100 such groups have received a total of $5.4 million in crypto donations, with funds being used for military purchases, disinformation, and propaganda.
Donations have been on the decline since July, with the exact impact of sanctions on this trend remaining unclear. Recently, on February 24th, a 10th package of sanctions was introduced against Russia.
Meanwhile, Chainalysis’s crime report highlights that most of the $456.8 million ransomware payments made in 2022 were taken by “actors” believed to be based in Russia. These cyber-attacks are often used by bad actors to push political agendas, such as that of the Russia-based pro-conflict ransomware group Conti.
The group reaped $66 million from victims in 2022 and has previously pledged “full support” to the Russian government.
