Crypto fundraising by pro-Russian groups continues as more sanctions are put in place
Groups in Russia are reportedly raising money in crypto to support paramilitary operations and circumvent US sanctions as the war with Ukraine continues.
As of September 22, these fundraising groups had raised $400,000 in cryptocurrency since the invasion began on February 24, according to a report from TRM Labs cited by CNBC.
Telegram becomes the crypto-funding platform of choice
The study found that groups allow people to donate money through the encrypted messaging app Telegram. The fund is then used to fund combat training in locations near the Ukrainian border, supply Russian-affiliated militia groups and finance thermal imaging equipment and radios, according to the report.
In addition, according to a CNBC report, the Novorossia Aid Coordinating Center collected approximately $21,000 in cryptocurrency, primarily bitcoin, with the intention of purchasing drones to support Russian operations.
According to Ari Redbord, head of legal and government affairs at TRM Labs, these groups likely use exchanges that don’t always comply with anti-money laundering and other standards.
“They are probably using non-compliant exchanges to move these funds [into fiat currency]”, Redbord told CNBC.
New sanctions from the EU
Meanwhile, the EU proposed a new round of sanctions against Moscow against the backdrop of the country’s war escalation. A source familiar with the situation recently told Bloomberg that the new sanctions extend to crypto, restricting European companies from providing cryptocurrency wallet, account or custody services to Russian citizens and entities based in Russia.
Despite the global sanctions, a Russian official confirmed in September that a bill on digital currencies drafted by the Ministry of Finance would establish a framework for crypto transactions. Ivan Chebeskov of the Fiscal Policy Department of the Ministry of Finance stated that a list of currencies and counterparty nations for a settlement framework will be outlined in the bill.
“I think an interesting part of this story is that crypto is just a payment method in these cases. It’s a way to move funds. And here’s an example of it being used for good and an example of it being used to the bad in this context, said Redbord.
In the middle of the war, Ukrainian crypto exchanges also reported an increase. Viktor Kochetov, CEO of Kyrrex crypto exchange, previously told Be[In]Crypto that the crypto business kept his financial ecosystem afloat and has grown it while he was in the middle of war.
According to Mykhailo Fedorov, Minister of Digital Transformation, the government of Ukraine used some of the $54 million earned via cryptocurrencies to buy weapons and arms. The tweet highlighted that there is still $6 million left to spend.
Chainalysis also noted in its September report that Ukraine ranked among the top 10 emerging markets dominating the Global Crypto Adoption Index and top 20 globally.
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