According to a recent report by Elliptic, cryptocurrency donations directed towards Russian military fundraising groups since the start of the Ukraine invasion have reached an astonishing $20 million. This significant influx of funds has sparked worries about the use of digital assets to finance military activities in the region. Elliptic, a firm specializing in blockchain analytics, has noted that almost two-thirds of the pro-Russian crypto funds involve entities that are sanctioned by the United States.
Meanwhile, Ukraine’s highly-publicized crypto donation campaign has garnered substantial support, raising at least $212 million. However, the report suggests that pro-Russian donations have gradually gained momentum in comparison to pro-Ukrainian donations.
One of the notable entities involved in the crypto payment rails is Task Force Rusich, a group of PMC Wagner mercenaries that is sanctioned by the U.S. Elliptic’s findings have also revealed that senior officials of the self-proclaimed Donetsk People’s Republic have been rewarding defectors and individuals providing intelligence about Ukrainian military positions with bitcoin.
Highlighting the risks associated with sanctioned entities, Elliptic researchers have discovered that over 80% of funds channeled to these entities end up on cryptocurrency exchanges. This finding underscores the necessity for robust compliance measures by exchanges in order to prevent sanction evasion.
Bitcoin has emerged as the digital asset of choice for most Russian donations, with relatively little utilization of decentralized finance (DeFi) protocols and ether. In addition, the Ukrainian government has launched an official website in March 2022 to accept crypto donations.
The conflict in Ukraine has brought attention to the use of cryptocurrencies in funding military activities. As crypto donations continue to rise, it is crucial for governments to regulate these transactions in order to prevent illicit financing and comply with sanctions.
Elliptic’s report emphasizes the importance of addressing the potential misuse of digital assets in conflicts. Increased vigilance and regulatory measures are necessary to prevent illicit financing and maintain international security.
Compiled by Coinbold