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Russians sending 'significant amounts of money' to help Ukraine via crypto

Ukraine's President Volodymyr Zelenskiy visits Kherson, Ukraine
Ukraine's President Volodymyr Zelenskiy visiting troops in Kherson, Ukraine. Photo: Reuters (Handout . / reuters)

Russians who are incensed by president Vladimir Putin's invasion are sending "significant amounts of money" through cryptocurrency back channels to help Ukraine, according to its deputy digital minister.

Two days after Putin's troops and tanks crossed the international border between Russia and Ukraine on 24 February 2022, the Ukrainian government's Twitter accounts posted requests for cryptocurrency donations.

Blockchains are transparent publicly distributed ledgers, and since then Ukraine has been analysing where in the world that crypto-donations are being sent from.

The war-torn country has been able to identify that more than 100,000 people have sent aid to Ukraine via cryptocurrency channels.

"Donations to Ukraine has varied from one dollar to millions of dollars," Ukraine's deputy digital minister Alex Bornyakov told Yahoo Finance's The Crypto Mile.

"Crypto, in certain cases, offers an anonymous way to transfer money. We saw that some Russians were donating to us a significant sum," Bornyakov added.

"The Russian people who have donated have sent significant amounts of money.

"I understand that from within Russia there is no other way for them to do this other than through crypto."

The majority of crypto-donations received by Ukraine to date have been in bitcoin (BTC-USD) and ether (ETH-USD), although US dollar stablecoins have contributed a significant proportion.

One-third of the donated amount came through the Crypto Fund Aid For Ukraine initiative, which is powered by the Ukraine-based crypto platform Kuna and blockchain company Everstake, and supported by the Ministry of Digital Transformation of Ukraine.

Among the most popular digital asset donations sent to Ukraine are, bitcoin, ethereum, cardano (ADA-USD), solana (SOL-USD), polkadot (DOT-USD) and stablecoins such as USDC (USDC-USD) and USDT (USDT-USD).

"So far Ukraine has received around 650 bitcoins, more than 10,000 ethereum, and there was also a significant amount of polkadot, almost 1.8 million in solana and $2.8m in the form of the USDC stablecoin," the deputy digital minister added.

Ukraine's crypto and blockchain industry

Since the beginning of the Russian invasion Ukraine cryptocurrency exchange Kuna has emerged as the largest crypto-fundraising platform in the country, an exchange founded by Ukrainian Mykhailo Chobanian in December 2015.

To cash out the crypto sent from around the world the Ukrainian government uses Kuna.

According to Crystal Blockchain Analytics, as of 30 November, over $184m in crypto assets have been raised in support of Ukraine.

These include a single transaction of $1.86m from the sale of NFTs created by Julian Assange and Pak.

And, a CryptoPunk NFT worth approximately $200,000 was also sent to the Ukraine government's Ethereum account.

The Ukrainian NGO 'Come Back Alive', which supports the nation's military, received several million dollars in crypto donations as reported in research by blockchain analytics firm Elliptic.

However, crowdfunding and content creating platform Patreon suspended Come Back Alive's page on 24 February for policy violations related to its military activities.

Donation in crypto can be made via the website for individuals who wanted to send cryptocurrency as aid to the country and its citizens. However, since the collapse of FTX in November 2022 the link to the website now redirects to the official Ukrainian government donation website.

Ukraine's war-battered economy

Since Russia's recent missile strikes against Ukraine's energy infrastructure, nation-wide electricity rationing is in place. The window in which Bornyakov could conduct the interview with Yahoo Finance UK was limited.

The Russian invasion has significantly impacted Ukraine's economy. The country has faced declining industrial production, rising inflation, and a depreciating currency.

The loss of Crimea and its industries when Russia annexed the region in February 2014 has also disrupted trade and investment, leading to a decrease in Ukraine's Gross Domestic Product and a rise in unemployment.

Additionally, the country has also had to cope with increased military spending and supporting internally displaced persons, further exacerbating the economic impact.

The International Monetary Fund (IMF) estimates that the conflict has cost Ukraine at least one-third of its GDP in 2022. With Ukraine's own economic data posting a 30.4% drop in GDP since the beginning of the war.

"In 2022, the Ukrainian economy suffered its largest losses and damages in the entire history of independence, inflicted on it by the Russian Federation," Ukrainian economy minister Yulia Svyrydenk, who is also first deputy prime minister, said in statement in January.

The decline in GDP as also been described as the biggest in any year since Ukraine won independence from the Soviet Union in 1991.

Ukraine DAO and Russian political activist Nadya Tolokonnikova

In July 2022, leading political activist and member of Pussy Riot Nadya Tolokonnikova told The Crypto Mile that NFTs can make powerful statements of civil disobedience and protest.

Tolokonnikova co-founded Ukraine DAO (decentralised autonomous organisation), which raised $6.75m (£5.66m) in ethereum in five days for organisations that help Ukrainians suffering from the war that has devastated their country. The funds were raised by selling an NFT depicting the Ukrainian flag.

Speaking on Episode 4 of The Crypto Mile, she said NFTs can be used to advance political causes: "Ukraine DAO has actually allowed a lot of people from Russia to donate to Ukraine, otherwise they would not have been able to send money because it is blocked by the Russian banking system."

Although the blockchain is a publicly visible distributed ledger recording all transactions in a transparent way, the system is out of reach of centralised authority and the crypto wallets that send and receive funds can remain anonymous.

Read more: UK unveils 'world-first' plans to regulate crypto and digital assets

"When you raise money for activism it is often for very sensitive topics that can potentially lead to trouble, so crypto can provide a layer of anonymity," Tolokonnikova said.

The co-founder of art-activist group Pussy Riot also launched Unicorn DAO in May 2022.

Unicorn DAO has pledged to use the NFT space to "redistribute wealth and visibility in order to create equality for women-identified and LGBTQ+ people".

The movement cites a report from 2021 by ArtTactic, that found only 5% of NFT sales were by female-identified artists.

Alex Bornyakov, Deputy Minister of Digital Transformation for Ukraine, speaks during the SALT conference in Manhattan, New York City, U.S
Alex Bornyakov, deputy minister of Digital Transformation for Ukraine. Photo: David 'Dee' Delgado/Reuters (David Dee Delgado / reuters)

The integration of NFTs, DAOs, and Decentralised Finance (DeFi) is transforming the way charities gather donations and distribute funds to those in need.

Crypto advocates have told news outlet Cointelegraph that the new technology has led to the creation of "new wealth distribution mechanisms".

According to crypto-author Anne Connelly, every organisation will eventually have a crypto donation platform, just like they accept credit cards.

Download the Yahoo Finance app, available for Apple and Android.

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