“Obviously we can’t buy nuclear bombs or missiles,” said Kuna.io CEO Michael Chobanyan. But “most non-lethal things you can buy with cryptocurrency.”
Cryptocurrency was expected to be a key variable in the war, both as a potential means of evading Russian sanctions and as a tool for supporters to finance Ukrainians. But in the days since Russia invaded, the Ukrainian government’s embrace of crypto has become more outspoken, attracting Western crypto evangelicals who see a chance to test their claims that blockchain technology can promote open societies.
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The cryptocurrency’s donations are much smaller than President Biden’s permission last week for $ 350 million in additional military aid to Ukraine and the US Agency for International Development’s promise of $ 54 million in humanitarian aid. Biden also asked Congress to allow an additional $ 10 billion.
Cryptocurrency is the best way to donate to Ukrainians since the government imposed martial law on February 24, limiting their ability to send or receive funds, said Sergei Vasilchuk, chief executive of Kyiv-based crypto company Everstake.
Supporters argue that the cryptocurrency has allowed Ukraine to raise money without restrictions imposed by government bureaucracy or centralized technology platforms in Silicon Valley, and that the public digital register of blockchain transactions offers greater transparency for donors on how money is spent. For example, GoFundMe and Patreon, which allow fans to pay creators, prohibit fundraising for military purposes.
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Tomika Tilleman, a Biden clerk in the Senate who now works as a chief politician for a new crypto venture capital firm founded by former federal prosecutor Katie Hawn, called the aid spill for Ukraine a “vivid illustration” of the technology’s potential to “help strengthening open societies and protecting democratic values. “
Tilleman said politicians who specialize in security would prefer to have more financial activity on cryptocurrency because it is easier to track. “This is actually a huge step compared to pallets full of money that have previously been sent to conflict zones,” he said.
The crowdfunding war is nothing new for Ukraine, which has used private donors to pay for military equipment since Russia took over Crimea in 2014. But skeptics wonder if the focus on cryptocurrency could lead to more illegal activity – saying the promise of transparency ends when it is converted into other currencies to buy goods – or inspire authoritarian governments to try a similar approach.
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Lee Rainers, a former senior fellow at the Federal Reserve Bank of New York, was skeptical of the argument that cryptocurrency was needed for donations. “Ukrainians are not those who are cut off from the global financial system, so nothing prevents them from receiving donations through GoFundMe, the Red Cross or any other platform, and [nongovernmental organization]”Rainers wrote in an email. The need to convert donations into traditional currency also undermines the idea that cryptocurrency is somehow more decentralized, he said. “The last time I checked, you can’t buy Javelins [missiles] with bitcoin. “
The call for crypto support came from 31-year-old Deputy Prime Minister of Ukraine Mikhail Fedorov, who acted as the country’s main digital agitator, urging Silicon Valley titans to ban Russia from its platforms and services. Fedorov first published a request for crypto donations in bitcoin, ether or theater in the Telegram messaging application. Half an hour later, Fedorov published the same on his own Twitter account. A few hours later he was in Ukraine official Twitter account.
Even Vitalik Buterin, co-founder of the Ethereum blockchain, wasn’t sure if the request was genuine, advising his 3 million Twitter followers to beware of fraud. Buterin deleted his warning after confirming that the request was legitimate. “But keep vigilant and always be slow and careful when sending irreversible crypto transactions,” he tweeted.
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Donations quickly spilled over from more than 46,000 people, most of whom donated just under $ 100 – all recorded in public books that characterize the cryptocurrency, according to a Washington Post analysis of public data on Ethereum’s blockchain. But several have donated more than $ 250,000 to Ethereum, including two prominent executives in the cryptocurrency business. Deepak Taplial, who made headlines last month after spending $ 23 million on NFT’s Crypto Punk Alien digital collector’s value, donated about $ 290,000, and Sam Bankman-Fried, chief executive of the FTX cryptocurrency exchange, donated large amount.
“I am pleased that Ukraine is using the tools available to accept crypto donations, as it shows how much it supports the community and how quickly we can help them in times of need,” Taplial told The Post in a statement. Bankman-Fried did not respond immediately to a request for comment.
All that is known about the third leading donor, who gave about $ 280,000, is that their portfolio (similar to a public bank account number) has earned nearly $ 3 million in 17 minutes since the failed launch of the cryptocurrency in November 2021, inciting accusations that he was a beneficiary of carpet-pulling fraud. Neither the identity of the person who controls the address, nor its location, nor anything else about them is recorded in the blockchain. Who controls the address did not respond to a request for comment from The Post via a blockchain chat service.
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Ukraine, which did not request NFT, received a map of the Donetsk region in eastern Ukraine, parts of which are controlled by Russian-backed separatists, in the colors of the Ukrainian flag, plus photos of blue-and-yellow peace signs and an animated “fire dragon.” NFT’s donations also include images from the Shibelon collection, which is “based on a mythology in which Elon Musk received ingenious powers from an alien who also created bitcoin,” the journalist wrote. Jacob Silvermanwho is working on a crypto book.
Chobanyan, chief executive of Kuna.io, said Ukraine did not need to sell NFT as foreign currency donations continued to invade, but that the government would sell them if necessary. “It doesn’t matter, we can sell everything now,” he said.
Someone donated this Shibelon NFT to the Ukrainian government. The NFT collection is based on a mythology in which Elon Musk is given ingenious powers by an alien who also created bitcoin. Supported by Soulja Boy, The Game and other celebrities.https: //t.co/0VQXhR7c9Z pic.twitter.com/M04KrK9IJc
– Jacob Silverman (@SilvermanJacob) February 27, 2022
In addition to established cryptocurrencies, Ukraine has received donations denominated in almost 100 obscure digital currencies, according to an analysis by Post data from Etherscan. These include a new one called Save Ukraine, another with a racist abusive name and several post-crypto themed communities in dog-focused jokes, and Musk, Tesla’s chief executive.
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The government’s strategy is first to convert less popular cryptocurrencies into traditional money and keep bitcoin and ether in reserves because they are more stable and liquid, Chobanyan said.
Donations are still arriving as new efforts are emerging to raise cryptocurrency for the Ukrainian government. Early Tuesday morning Ukrainian time, Fedorov announcements AidForUkraine, a joint effort of its digital ministry, developers behind the blockchain Solana and Everstake. So far, AidForUkraine has raised $ 1.4 million, according to its website.
The speed with which AidForUkraine’s fundraising efforts came together was “magic,” said Vasilchuk of Everstake, who fled Kyiv days before the invasion thanks to his pilot’s license and is in a temporary residence in Florida. In a group chat on Signal, the encrypted messaging app, he and Anatoliy Yakovenko, Ukraine’s US co-founder of Solana, spoke with members of Ukraine’s central bank, the Ministry of Digital Technology, FTX and others, Vasilchuk said.
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But in perhaps the strangest turn so far, Wednesday morning, the Ukrainian government tweets confirmation that there will be an “air shipment” for donors on Thursday, but does not provide details on what will lead to this. Airdrops, which promises to put a token in a crypto wallet for participating users, is a popular way for crypto projects to entice new users with the promise of free NFT, which can be used as a ticket to future collector’s events. of time, or a governing sign that gives the right to vote for collective decisions.
“It wasn’t long ago when you said you were going to do an air launch, you know, like a war-torn country. [it] meant that food and medicine would be literally dropped from the air of your people “, Cass Piansi, co-host of the Crypto Critic podcast, posted on Twitter. “Now this means that the war-torn country will create a token and hand it out.
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Eric Wall, Chief Information Officer of Arcane Assets, based in a Scandinavian cryptocurrency investment company, tweets that Ukraine’s move is a “gamification of karma.”
Less than two days later, Fedorov announced that the airdrop had been canceled. Instead, he tweeted, the government will launch a new NFT project in support of the Ukrainian military. He stressed that Ukraine has no plans to issue its own interchangeable token, such as bitcoin, perhaps in connection with speculation about such an idea.
To the extent that air drops can encourage viewers to donate, they can also inspire ‘air drop building’, in which cryptocurrency holders hoping to grab the prize do the least to participate. About 8,300 people donated less than $ 10 after the initial announcement.
In addition to official government efforts, Come Back Alive, a non-governmental organization in favor of the Ukrainian army, has also received millions in cryptocurrency donations – and received millions more from UkraineDAO, a blockchain group that held a fundraising auction, according to blockchain data.
The organizers of the NGO turned to crypto after their campaign was stopped by Patreon. But UkraineDAO is limiting spending to help war victims, the New York Times reports. Patreon spokeswoman Ellen Sutrewith said that “it would be absolutely acceptable according to our guidelines”.
Ukraine does not rule out the use of donations to buy deadly weapons, Chobanyan said, but was unsure if that was feasible. “Another day like this and we will buy deadly weapons,” he told Ukraine’s Telegram early Tuesday.