Ukrainians Use Crypto As a Crowdfunding Tool

Ukraine has become the first country to use crypto as a crowdfunding tool, raising almost $13 million in donations after Russia’s invasion. The country’s government posted wallet addresses for Bitcoin, Ethereum and Tether on social media.

It’s the latest sign that cryptocurrencies aren’t just for the rich and powerful, but also for people in need. A number of Ukrainian organizations, including Come Back Alive and an NGO that provides military equipment, have relied on crypto to help raise funds for their war efforts.

The use of cryptocurrencies for cross-border transfers can bring risks, though. Wiring money via crypto can incur high transaction fees, and intermediaries can be prone to cyberattacks. And fraud has been a problem, too. Some scammers issued a token called Peaceful World that posed as a Ukrainian official and misled donors.

Some of these nefarious actors are using digital currencies to dodge sanctions, and American and European lawmakers worry that Russians could use the coins for the same purpose. But Ukraine’s government and the decentralized autonomous organization UkraineDAO, which supports the country’s military, have been careful to verify the legitimacy of any crypto donations.

Donations have risen in the wake of the invasion, according to blockchain analysis firm Elliptic. So far, a non-fungible token (NFT) sold for $6.5m has been donated to UkraineDAO, and $10 million in crypto has been given to organizations supporting the military.

These groups and the government are coordinating crypto donations through decentralized autonomous organizations, which are built on the Ethereum blockchain and offer a more reliable means for people to send and receive money. They’re working with other groups on the ground to make sure that money actually gets where it needs to go, says Sarah Muchnik, a researcher at blockchain analytics firm Elliptic.

Aside from crypto’s ability to facilitate direct donations, it offers several other advantages, she says. One is that funds are tracked on a public ledger, which makes them more easily traceable. Another is that they can be returned to contributors if they’re not used.