“We obviously can’t buy nukes or rockets,” Kuna.io chief executive Michael Chobanian said. But “most non-lethal things you can buy with crypto”.
Cryptocurrency was expected to be a key variable in the war — both as a potential means for Russia to evade sanctions and as a tool for partisans to fund Ukrainians. But in the days following Russia’s invasion, the Ukrainian government’s adoption of crypto has become more overt, attracting Western crypto evangelists who see a chance to battle-test their claims that the technology blockchain can promote open societies.
Cryptocurrency donations fall far short of President Biden’s authorization last week of $350 million in additional military aid to Ukraine and USAID’s commitment to $54 million in humanitarian aid.
Cryptocurrency has been the best way for Ukrainians to donate since the government instituted martial law on Feb. 24, which limited the ability to send or receive funds, said Sergey Vasylchuk, chief executive of Kyiv-based crypto firm Everstake.
Proponents claim that cryptocurrency has enabled Ukraine to raise funds without the restrictions imposed by government bureaucracy or centralized Silicon Valley tech hubs – and that the blockchain’s public digital transaction ledger offers more transparency to donors on how the money is spent. For example, GoFundMe and Patreon, which allow fans to pay creators, prohibit military fundraising.
Tomicah Tillemann, a former Biden staffer when he was a senator who now works as a policy director for a new crypto venture capital firm launched by former federal prosecutor Katie Haun, called the influx of aid to Ukraine a “living illustration” of the potential of technology “to help strengthen open societies and safeguard democratic values.”
Tillemann said security policymakers would prefer more financial activity to be directed to cryptocurrency because it is easier to trace. “It’s actually a huge step up from the pallets full of cash that were previously sent to conflict zones,” he said.
The crowdfunding war is do not new to ukraine, which appealed to private donors to pay for military equipment after the capture of Crimea by Russia. But skeptics question whether the focus on crypto could lead to more illicit activity – pointing out that the promise of transparency ends when it is converted into other currencies to buy goods – or incentivize authoritarian governments to try a similar approach.
Lee Reiners, a former senior partner at the Federal Reserve Bank of New York, was skeptical of the argument that cryptocurrency was necessary for donations. “Ukrainians are not the ones who are cut off from the global financial system, so there is nothing stopping them from receiving donations through GoFundMe, the Red Cross or any other platform and NGO,” Reiners wrote via email. The need to convert donations into traditional currency also undermines the idea that cryptocurrency is somehow more decentralized, he said. “Last time I checked, you can’t buy Javelins [missiles] with bitcoins.
The call for crypto support came from Ukraine’s 31-year-old Deputy Prime Minister Mykhailo Fedorov, who acted as the country’s main digital agitator, pushing Silicon Valley titans to ban Russia from their platforms and services. Fedorov first issued a plea on Telegram messaging app for crypto donations in bitcoin, ether or tether. Half an hour later, Fedorov posted the same from his Twitter account. A few hours later it was over Ukraine official Twitter account.
Even Ethereum co-founder Vitalik Buterin wasn’t sure it was real, advising his 3 million Twitter followers to beware of scams. Buterin removed his disclaimer after confirming the request was legitimate. “But continue to be vigilant, and always be slow and careful when sending irreversible crypto transactions,” he tweeted.
Donations quickly poured in from more than 46,000 people, most of whom gave just under $100 – all recorded in the public ledgers that characterize cryptocurrency, according to a Washington Post analysis of public data from the Ethereum blockchain. . But a few have donated more than $250,000 to Ethereum, including two prominent cryptocurrency company CEOs. Deepak Thapliyal, who made headlines last month after spending $23 million on a “Crypto Punk Alien” NFT digital collectible, donated around $290,000, and Sam Bankman-Fried, CEO of the FTX cryptocurrency exchange, donated a large sum.
“I’m glad Ukraine is using the tools available to accept crypto donations, as it shows how supportive the community is and how quickly we can help them when needed,” Thapliyal told the Post in a statement. . Bankman-Fried did not immediately respond to request for comment.
All that is known of a third top donor, who gave about $280,000, is that his wallet (similar to a public bank account number) earned nearly $3 million in 17 minutes since the failed launch of a cryptocurrency in November 2021, attracting accusations of having been the beneficiary of a “carpet pulling” scam. Neither the identity of whoever controls the address, nor its location, nor anything else about it is recorded on the blockchain. The one who checks the address did not respond to a request for comment from The Post via a blockchain chat service.
Ukraine, which had not requested an NFT, received a map of the Donetsk region in eastern Ukraine, parts of which have been controlled by Russian-backed separatists, in the colors of the Ukrainian flag , along with photos of blue and yellow peace signs and an animated “fire dragon.” NFT’s donations also included images from the Shibelon Collection, which is “based on a mythology in which Elon Musk received genius powers from an alien, who also created bitcoin,” the reporter wrote. Jacob Silvermanwho is working on a book on cryptography.
Chobanian, the managing director of Kuna.io, said Ukraine had not yet needed to sell NFTs because currency donations continued to flow, but the government would sell them if necessary. “It’s okay, we can sell anything now,” he said.
Someone donated this Shibelon NFT to the Ukrainian government. The NFT collection is based on a mythology in which Elon Musk received awesome powers from an alien, who also created bitcoin. Endorsements from Soulja Boy, The Game and other celebrities.https://t.co/0VQXhR7c9Z pic.twitter.com/M04KrK9IJc
— Jacob Silverman (@SilvermanJacob) February 27, 2022
In addition to well-established cryptocurrencies, Ukraine received donations denominated in nearly 100 obscure digital currencies, according to a Post analysis of Etherscan data. They included a new one named “Save Ukraine,” another with a racially abusive name, and several themed around crypto community jokes focusing on dogs and Tesla CEO Musk.
The government’s strategy has been to convert less popular cryptocurrencies into traditional currency first and keep bitcoin and ether in reserves because they are more stable and liquid, Chobanian said.
Donations continued to pour in as new efforts to collect crypto for the Ukrainian government arose. Early Tuesday morning, Ukraine time, Fedorov announcement AidForUkraine, a joint fundraising effort between its digital ministry, the developers behind the Solana blockchain, and Everstake. So far, AidForUkraine has raised $1.4 million, according to its website.
The speed with which AidForUkraine’s fundraising effort came together was “magical”, said Vasylchuk of Everstake, who fled Kyiv days before the invasion on his pilot’s license and is in temporary housing in Florida. During a group chat on Signal, the encrypted messaging app, he and Anatoly Yakovenko, the Ukrainian American co-founder of Solana, spoke with members of the Ukrainian Central Bank, the Ministry of Digital, FTX and others, Vasylchuk said.
But in perhaps the strangest twist yet, early Wednesday morning the Ukrainian government tweeted confirmation that there would be an “airdrop” for donors on Thursday, but he has not yet given details on what it will entail. Airdrops, which promise to “drop” a token into the crypto wallet for participating consumers, are a popular way for crypto projects trying to attract new users with the promise of a free NFT, which could be used as a ticket or a trigger mechanism in future events or a collectible whose value increases over time.
“Not too long ago when you said you were going to do an airdrop, you know, as a war-torn country, [it] meant that food and medicine were literally going to be airdropped at your people,” Cas Piancey, Crypto Critic podcast co-host, posted on Twitter. “Now that means the war-torn country will create a token and give it away.”
Eric Wall, CIO of Arcane Assets, a Scandinavian-based cryptocurrency investment firm, tweeted that Ukraine’s decision was a “gamification of karma”.
But just as airdrops can entice onlookers to donate, they can also inspire “airdrop farming,” when crypto holders hoping to reap the reward do the bare minimum to participate. After the announcement, some 8,300 people donated less than $10.
Beyond the official government-led effort, Come Back Alive, an NGO benefiting the Ukrainian military, has also received millions in cryptocurrency donations – and receives millions more from “UkraineDAO “, a blockchain-organized group that held an auction to raise funds, according to blockchain data.
NGO organizers turned to crypto after their campaign was suspended from Patreon. But the DAO limits its spending on aid to war victims, the The New York Times reported. Patreon spokeswoman Ellen Satterwhite said it would be “absolutely allowed under our guidelines.”
Ukraine hasn’t ruled out using donations to buy lethal weapons, Chobanian said, but he wasn’t sure that was feasible. “Another day like this and we will buy lethal weapons,” he said on Telegram from Ukraine early Tuesday morning.