Ukrainian Groups Raise $22.2M In Crypto Donations

Law360 (February 28, 2022, 3:46 PM EST) -- The Ukrainian government and groups supporting its military have raised an estimated $22.2 million in crypto-asset donations since the start of the Russian invasion, according to a report from blockchain analytics firm Elliptic.

The figure, which reflects donations through late morning on Monday (U.S. Eastern time), includes cryptocurrencies such as bitcoin and ether; stablecoins, which are digital tokens whose price is pegged to a fiat currency such as the U.S. dollar; and assets such as non-fungible tokens, which indicate ownership of an item.

"Cryptoassets such as bitcoin have emerged as an important alternative crowdfunding method," the report said. "They allow quick, cross-border donations, which bypass financial institutions that might be blocking payments to these groups."

Twitter accounts associated with the Ukrainian government solicited cryptocurrency donations over the weekend and posted addresses where funds could be sent. The latest figures show those addresses have received $14.8 million in 18,561 transactions, the report said.

Other funds have gone to non-governmental organizations that support the Ukrainian military; to a decentralized autonomous organization called UkraineDAO that says it will donate ether to a military support group; and to a token project raising funds that says funds will be split among various Ukrainian charities.

Elliptic noted that scammers have also been exploiting the situation through fraudulent fundraisers.

Cryptocurrency could also prove useful for Russian actors on the other side of the conflict. New York's Department of Financial Services warned in an industry letter on Friday that the Russian invasion has "significantly" increased the risk that cryptocurrency could be used as a sanctions dodge. Russia is also developing its own central bank digital currency, which could help Russian entities transact outside the traditional banking system.

Ukraine's fundraising makes it one of only a few governments to engage so directly with cryptocurrencies. El Salvador became the first country to recognize bitcoin as legal tender last year, and its government has since invested millions in bitcoin and set up a state-backed wallet for bitcoin transfer and storage. An early U.S.-based initiative, dubbed CityCoin, creates city-specific digital tokens that raise funds for public projects. The city of Miami in February received $5.25 million from its MiamiCoin, according to an announcement from Miami Mayor Francis Suarez.

--Additional reporting by Jon Hill. Editing by Kelly Duncan.

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