Hacker groups and traditional resistance movements in Ukraine are increasingly using cryptoassets as a way to fund their activities and bypass traditional financial services providers.
Donations to groups involved in the conflict with Russia have totaled several hundred thousand dollars, with donations increasing by more than 900% in 2021, blockchain analytics firm Elliptic said in their latest report.
Among the groups that have made use of bitcoin (BTC) and crypto in their fundraising efforts is the Ukrainian Cyber Alliance, a collective of hackers engaged in attacks against Russian targets, which now exclusively rely on cryptoasset donations. Close to USD 100,000 has been received by the group over the past year, spread across BTC, litecoin (LTC), ethereum (ETH), and various stablecoins, according to Elliptic data.
Meanwhile, Myrotvorets Center, another Ukrainian group said to be closely linked to the government, has reportedly received donations in BTC worth at least USD 268,000 from over 40 countries. The organization turned to bitcoin in 2016 after its PayPal account was suspended and the funds held in it seized by the US payments company, per the researchers.
According to Elliptic, Myrotvorets publishes personal information about “pro-Russian terrorists, separatists, mercenaries, war criminals, and murderers.” In 2015, information published on its website led to the assassinations of a Ukrainian writer and a legislator, Elliptic said.
They further noted that the development of Ukrainian groups turning to crypto is notable because it emulates a technique previously used by some Russian groups.
For example, several online fundraising campaigns have accepted donations in the form of cryptocurrency for pro-Russian separatists in Eastern Ukraine since 2014. Among them, the “Save the Donbass” campaign received at “least 68 Bitcoin donations” between 2014 and 2016, the Elliptic said.
Another example cited in the article is that of Igor Vsevolodovich Girkin, a veteran of the Russian army and state security service FSB who took part in combat in Ukraine in 2014, who also accepts donations in BTC as well as through various fiat-based money transfer platforms.
Girkin is also among the people charged by Dutch authorities for the shooting down of Malaysia Airlines flight 17 in July 2014.
‘A powerful tool’
Based on their findings, Elliptic called cryptocurrency “a powerful, emerging tool for the crowdfunding of war.” And although it admitted that crypto still just makes up “a small proportion” of the donations, it said it has become “a robust and increasingly popular alternative” to traditional bank-based donations.
“Cryptocurrency is also particularly suited to cross-border donations, allowing easier access to wealthy overseas donors,” the researchers said, noting that financial institutions have no ability to close crypto wallets like they can with fiat-based systems.
Elliptic concluded that the fundraising done by Ukrainian groups – some with strong ties to the government – can be seen as part of a trend of nation-states turning to crypto as a way to raise funds outside of the traditional system.
Among other countries benefitting from this is Iran, which has recently become more active in the Bitcoin mining space, and North Korea, which is believed to use crypto as a way to fund its missile program.
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