Since Russia invaded Ukraine last year, cryptocurrency has played a surprisingly big role. As a new fundraising tool, crypto has helped Ukraine raise millions of dollars as it seeks to supplement the already gargantuan amount of money flowing into the country from official U.S. aid and a constellation of charitable organizations. Russia, meanwhile, doesn’t appear nearly as interested in digital assets, though new research shows that pro-Russian groups have been using digital assets to raise money for separatist movements in Ukraine. While Ukraine’s crypto activities have largely been sanctioned by the government itself, those fundraising for Russia have sometimes turned to shadier tactics.
Shady Russian Crowdfunding Efforts
Research published Tuesday by blockchain security firm CertiK shows that certain pro-Russian web groups have been using cryptocurrency as a way to crowdsource funds for Russian soldiers. Much of the money is being used to fund “weapons, equipment, and supplies purchases,” according to CertiK. These informal fundraising tactics are being pushed by clusters of Telegram channels, which are used to promote crypto wallet addresses, namely Bitcoin and Ethereum. Researchers write that...
After the exclusion of Russia from the global financial system, pro-Russian groups have had to turn to other methods of financing the war effort. Cryptocurrency has been one such avenue. The public nature of transactions on the Ethereum and Bitcoin networks makes these flows trackable, which can aid in identifying the source and destination of funds, along with the groups and individuals involved.
Another recently published report, from blockchain analysis firm Elliptic similarly notes that the “most widely observed use of cryptoassets by Russian separatist groups is to procure and provide military equipment – lethal and non-lethal – to Russian soldiers and mercenaries.” Such groups tend to promote pages with links to crypto addresses and statements about how the funds will be used.
Despite being limited in volume, separatist fundraisers often have a nexus to cybercrime, sanctioned entities or entities that openly advocate or glorify potential violations of international law. Dark markets constitute the fourth largest known source of donations to proRussian fundraising campaigns. A significant portion of donations, however, came from mixers, with smaller amounts originating from similar obfuscation protocols such as privacy wallets and coin swap services...
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It’s not just physical munitions that are being funded, however—it’s also digital ones. A number of channels have been seen crowdsourcing donations for the pro-Russian hacktivist collective “Killnet,” according to both CertiK and Elliptic. Since the beginning of the war, Killnet has been responsible for hurling what most security analysts consider “nuisance-level” attacks at Ukraine-allied targets. The hacker group uses predominantly DDoS attacks to target NATO and West-aligned websites, including those belonging to airports, media companies and health organizations. A number of Telegram channels have been seen promoting “wallet addresses or content” for the hacking group, CertiK writes.
Ukraine’s Crypto Fundraising Flurry
By contrast, Ukraine’s crypto fundraising has been enthusiastic and ongoing. It even has a DAO. Research shows that digital assets have been flooding into the country from a number of different organizations and sources. Ukraine’s government has also welcomed crypto donations in a number of different formats. In particular, the Aid for Ukraine campaign, an official charity, features its own crypto donation option for givers. Elliptic reports that Ukrainian government has raised tens of millions of dollars via direct crypto asset donations.