Since the beginning of the invasion in Ukraine, the possibility has been raised that cryptocurrencies could be exploited by Russia to circumvent sanctions. The alarms on the subject then proved to be excessive, also due to the limits of a market that represents only a fraction of the global currency market, consequently making it very complex to transfer the funds necessary to support the eleventh largest economy in the world.
The case
What is DarkFi, the new crypto-threat that already scares governments
by Andrea Daniele Signorelli
Yet, an in-depth analysis by the specialized magazine Coindesk has shown how cryptocurrencies are still playing a non-negligible role. In particular, a large group of volunteers – also made up of Russian influencers and celebrities – uses them to raise funds for the Moscow army, which is struggling with a chronic shortage of basic necessities, war devices of all kinds and also of weapons and ammunition.
Artificial intelligence in the cryptocurrency sector
by Amelia Tomasicchio
There are dozens of associations that deal with all this, including for example the Novorossia Aid Coordinating Center (NACC) or conservative organizations such as MOO Veche (which before the war mainly dealt with “preserving traditions”). By exploiting exchanges (platforms for buying and selling cryptocurrencies) based in Russia such as Garantex and Bitzlato – but also giants in the sector such as Binance, Kucoin or Huobi – these realities have therefore used cryptocurrencies to circumvent sanctions and also receive funds abroad.
“We used to use PayPal, but it was blocked multiple times and now it can no longer be used as a tool to collect foreign donations,” Alexey Markov, one of the founders of NACC, also explained to Coindesk. “A lot of people who live far from Russia want to support the work of our association. Now the only way to do it is through cryptocurrencies”. According to his statements, the NACC has also raised funds from Europe, Australia and the United States.
But why don’t the main exchanges in the world (often based in tax havens such as the Caymans or the Seychelles) prevent these donations? “We block all transactions that our investigators are able to link to illegal use and are currently investigating all addresses reported to us with law enforcement,” explained a Binance spokesperson referring to the 15 pro- Russia that would be present on the largest exchange in the world.
Overall, the amount raised by NACC for Russian troops is not huge: just over $40,000 in bitcoin, ether and USDT. After analyzing more than 300 wallets (digital wallets to which cryptocurrencies can be sent), Coindesk reporter Anna Baydakova revealed how, in total, about 1.8 million dollars would have been raised by dozens of associations.
However, other realities have disclosed much higher numbers: according to the specialized company Chainanalysis, this figure reaches 5.4 million dollars; while Binance’s investigations led to an even higher number: 7.2 million. Of course, nothing comparable to the figures collected through cryptocurrencies from Ukraine (which had already obtained 135 million dollars in July last year), but in this sector the differences between the two nations are enormous.
First of all, Ukraine – which obviously also receives offers in traditional money – has from the very beginning expressly requested to receive cryptocurrencies, disclosing the address to which to send them via the official government Twitter channel. Furthermore, obviously, the international and economic support in favor of Kiev is immensely superior to that of Russia, which furthermore cannot request foreign donations in such an explicit and transparent manner (nor does it want to do so, to avoid it being interpreted as a signal of weakness).
Although it is a handful of millions of dollars at most, these funds are nonetheless of significant importance for the Moscow army. For example, the actress and far-right personality Anastasia Mikhaylovskaya has raised over $30,000 through her website alone (a higher amount came through the various anonymous Telegram channels she manages), using it to buy food, clothes, medicine, bulletproof vests, helmets, drones and optical equipment.
The Rusich paramilitary group, associated with the mercenaries of the Wagner group, would instead have collected over 200 thousand dollars in bitcoin, ether and various stablecoins (cryptocurrencies with a fixed value), using them to buy ammunition, medical supplies, optical devices, radios and more. To increase the flow of money, the IT experts of the Rusich group also employ some cyberguerrilla tactics, such as hacking a Ukrainian charity fund to connect it to their wallet, through which they have received at least $30,000 in ether.
Also involved in collecting pro-Russia donations are bloggers such as Vladimir Romanov, based in Crimea, the influencer sisters Yekaterina and Valentina Kornienko, TV presenters such as Yevgeny Poddubny (who raised over 200 thousand dollars) and many others. Faced with all this, obviously, the Ukrainians are not standing by: a startup in the blockchain sector such as HAPI has, for example, called a “hunting season” for pro-Russian wallets, offering a reward to people who track down the greatest number and then reporting everything to the Ukrainian cybersecurity forces, which thanks to this initiative managed to block dozens of accounts.
While traditional warfare unfortunately shows no signs of decreasing in intensity, this front of the cyber confrontation between Russia and Ukraine also seems destined to go on for a long time to come.