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CRYPTO AND THE UKRAINE WAR
War and Crypto

The war between Ukraine and Russia has not just been a war of bombings and shootings. It also has shown to be a digital war in which cryptocurrencies play a crucial role. Many crypto projects have set new goals to help Ukraine in any way possible. Some help by sending digital funds, some help by spreading news about the war, and some projects even help by directly attacking the Russian government.

CRYPTO REINFORCEMENTS

Since the war began, lots of crypto donations have been made to purchase military equipment and other purchases. Ukraine is known for its crypto developments being the cradle of a lot of promising new crypto related companies. Last year, a market consultancy ranked Ukraine fourth place for global crypto adoption. In September 2021, Ukraine even formally legalized crypto.

On February 26, after a Ukrainian government official tweeted that the country would now accept international aid via cryptocurrency, more than $100 million USD in crypto had been raised. After initially accepting only bitcoin and tether, the Ukrainian government had expanded its capacity to accept over 70 forms of crypto. Ukraine’s largest crypto exchange, Kuna, helped organize this effort.

With the money, two funds were initially set up: one for humanitarian and the other for military purposes. However, as the violence escalated the funds were merged and directed entirely toward supporting the Ukrainian military. Body armour, night vision goggles, helmets, medicine, and food were bought to support Ukrainian frontline fighters.

In addition to donations, Ukraine’s Ministry of Digital Transformation had created an ingenious way to support the country’s resistance to the Russian invasion. This was done through a sophisticated use of social media to promote Ukrainian interests around the world via hackathons, where hackers were rewarded with prizes as high as $100,000 USD for successfully attacking Russian systems. The Hacken Foundation, led by Dyma Budorin, also had turned their core service into an effective tool to hack and disarrange Russian companies and governmental issues who support the war on Ukraine. 

Crypto War Ukraine

NON FUNGIBLE SUPPORT

The good thing about cryptocurrency is that governmental institutes were able to move quickly because of the absence of intermediaries. Bank transfers can, indeed, take several days to be deposited into Ukrainian government’s accounts, while cryptocurrency was deposited within a few minutes.

Digital art commoditized as non-fungible tokens (NFTs) had also become a significant donation source for the Ukrainian government. The Ukrainian government had received hundreds of NFT donations as of March 5, including a CryptoPunk valued at over $200,000 USD. The Ukrainian government and external organizations also started minting and selling NFTs to raise funds, with a recent Ukrainian flag NFT sold for $6.5 million in ether. However, these crypto donations to Ukraine are relatively small compared to the billions of dollars in international military and humanitarian aid flowing to Ukraine from partner governments. 

There are over 100 NFT collections dedicated to funding Ukrainians who are at war on their own soil.  Meanwhile, developers are currently working on digitizing some artworks that were already lying around. Below you’ll find some great NFT-like projects who made quite an impact.

Ukraine war NFT

Come Back Alive
A Ukrainian NGO that since 2014 has collected money for military equipment and training, relies on crypto after it was kicked off Patreon, a fund-raising platform that accepts donations in fiat currency but does not allow them to be spent on military apparatus.

UkraineDAO
A crypto collective, auctioned a non-fungible token (NFT) of a Ukrainian flag for $6.5m-worth of Ethereum. It is the tenth most expensive NFT ever sold according to Elliptic, an analytics firm. The proceeds will be spent on humanitarian aid.

Ukraine MKMRE
A project started by the AI Foundation. MKMRE stands for “Medical Kits and Meals Ready-to-Eat.” This project combines former state department officials, tech entrepreneurs, and ex-military members who were able to mobilize quickly following the recent Afghan refugee situation, as when the Afghan citizens needed help, Ukraine was one of the few to lend a hand. 

Holy Water
This NFT collection of artworks is mainly owned by Ukrainians. It was an initiative to create funds that would be useful for the Ukrainians in the ongoing war. The proceeds from these NFTs are given to the Ukraine Ministry of Digital transformation. Bohdan Nevis, the CEO of Holy Water, is focused on making at least $1M from NFT sales. Each artwork is sold for 0.08ETH+gas. Right now, Holy water has close to 1000 artists.

RUSSIAN SANCTIONS

While digital warfare can benefit some people in human and military terms, particularly by overcoming the slowness of conventional financial systems, it can make it possible for others to circumvent the international sanctions that have been imposed on them. In this regard, it should be noted that according to some sources, cryptocurrency is also serving as a safe haven for many ordinary Russian citizens who are trying to hang on to their savings inside a banking system that has numerous restrictions and vulnerabilities.

Economic sanctions against Russia are not new. A number have been put in place since the country annexed Crimea in 2014. The current Russian invasion of Ukraine has resulted in new financial and economic sanctions that penalize Russian organizations and individuals, including oligarchs. 

However, here again, proceeding through the lightly regulated cryptocurrency world could help Russian organizations, governments and oligarchs evade sanctions and carry on their financial activities. Since the start of the war, the conversion of Russian rubles into cryptocurrency has literally exploded.

Moreover, the usefulness of cryptocurrency for these types of transactions is temporary. The sums used to obtain cryptocurrency actually become traceable — and thus, subject to sanctions — as soon as they land in traditional bank accounts. Cyrptocurrency is also becoming less and less untraceable thanks to the increasing expertise of law enforcement. (Jo Adetunji, 2022)

Nevertheless some crypto organizations like HAPI try to fight these type of cryptocurrency transactions. By closely cooperating with the Ukrainian Ministry of Digital Transformation, HAPI and its partners have successfully detected, traced, and suspended dozens of illegal transactions, uncovered a number of Russian elites’ wallets and, with the help of Binance and Whitebit exchanges, put a stop to laundering of assets. 

War Sanctions Crypto

CRYPTO ADOPTION

It is well known that cryptocurrencies have been growing in popularity over the years. However, we can see a real adoption-shift. The fact that cryptocurrencies fill such an important role in modern day warfare shows that it has become a more than useful asset that easily outweighs and outspeeds our banking system, especially at times where every second matters.

Although it will always remain a double-edged sword that can be used for bad and for good, its developments have been unparalleled. Crypto will continue to claim its spot in our society, especially now that times are rough.