Ukrainian paramilitary groups have been fighting Russian-sponsored forces in the east of the country at varying levels of intensity since the 2014 Russian invasion, but these groups have only recently begun funding themselves with donations of bitcoins, according to a Tuesday analysis published by blockchain analytics firm Elliptical.
“These groups are funded by private donors, who have used bank transfers and payment apps to donate millions of dollars,” the report said. “BitcoinBTCUSD,
has also emerged as an important alternative funding method, allowing international donors to bypass financial institutions that block payments to these groups.
Elliptic has identified a series of cryptocurrency wallets used by Ukrainian volunteer groups, which have received a total of $570,000 in bitcoin donations since the dispute began, with the vast majority of donations made in 2021.
Among the groups that have accepted bitcoin donations are Come Back Alive, which donates military equipment to Ukrainian fighters, the Ukrainian Cyber Alliance, which Time Magazine has described as “online shock troops in the conflict of Ukraine with Russia” and the Kyiv-based organization Myrtvorets Center.
The Elliptic report says Ukrainian groups are mimicking techniques the Russians have used since the start of the war, when they launched online campaigns to raise money for pro-Russian separatists in eastern Ukraine, often using cryptocurrencies.
The report adds that crypto donations still represent a small portion of the donations received on both sides of the conflict, but “cryptocurrency has proven to be a robust and increasingly popular alternative.”
“Some of the Ukrainian volunteer groups and NGOs accepting crypto donations have very close ties to the Ukrainian government – and this adds to a trend of nation states turning to cryptocurrency as a way to raise funds” , says the report. “Iran is using bitcoin mining as a way to monetize its energy reserves, while North Korea is allegedly stealing cryptocurrency to support its missile development program.”