Both sides of the Russia-Ukraine conflict are being funded by crypto.
Over 54 pro-Russian volunteer groups have cumulatively sourced $2.2 million in cryptocurrency donations to fund war efforts in Ukraine, according to a report from Chainalysis on Friday.
The blockchain analytics firm said that the vast majority of funds were sent in Bitcoin ($1.45 million) and Ethereum ($590,000), with “considerable quantities” sent in , , and as well. Most of the funds were donated to just a few top groups, with one account receiving over $1 million in crypto.
“Social media posts from the groups indicate that a large portion of these funds are being used to equip paramilitary groups,” Chainalysis said. The report claims that about half of the accounts collecting donations have publicly solicited support for militias located in Donetsk and Luhansk—territories sanctioned by the Office of Foreign Assets Control (OFAC).
U.S. politicians, such as Senator Elizabeth Warren, raised concerns earlier this year about the possibility of Russia using crypto to evade sanctions. Chainalysis today highlighted a pro-Russia group that claims to be doing exactly that. Project Terricon, which has been soliciting donations in crypto to support Russian militia groups, “explicitly states on their website that they are using cryptocurrency due to the imposition of sanctions,” the report states.
Chainalysis co-founder Jony Levin argued back in March that the potential for crypto to be used to evade sanctions was limited, given that large amounts (of more than $1 billion, for example) could easily be tracked on public blockchain networks. The crypto-tracing firm’s report today, however, suggests that small crypto donations are indeed possible, and perhaps even attractive, for sanctioned entities.
The $2.2 million received by Russian groups, according to Chainalysis, is still dwarfed by the tens of millions donated to the Ukrainian side of the war effort in March. Deputy Minister of Ukraine’s Ministry of Digital Transformation, Alex Bornyakov, has publicly solicited donations in crypto since the start of the war.
As of March, crypto analytics firm Elliptic placed the total raised by Ukrainian groups in crypto donations at $64 million, though Bornyakov himself said it was “close to $100 million” at the time.