Ukraine Government gets Crypto Donations in millions After Russian Invasion

The crisis in Ukraine began in Ukraine’s capital city of Kyiv in November 2013 in response to Ukrainian President Viktor Yanukovych’s decision to reject a plan for closer economic integration with the European Union. President Yanukovych departed the nation in February 2014, after a harsh response by state security forces accidentally drew an even larger number of protestors and intensified the crisis. 

Russian soldiers seized control of Ukraine’s Crimean Peninsula in March 2014, before legally annexing the peninsula after Crimean decided to join the Russian Federation in a contentious local referendum. Russian President Vladimir Putin emphasized the importance of defending the rights of Russian people and Russian speakers in Crimea and southeast Ukraine. The crisis exacerbated ethnic tensions, and two months later, pro-Russian rebels in eastern Ukraine’s Donetsk and Luhansk regions staged a referendum to proclaim independence from Ukraine. 

Since April 2014, violence in eastern Ukraine between Russian-backed separatist militants and the Ukrainian military has killed over 10,300 people and injured almost 24,000, according to conservative estimates. Despite Moscow’s denials, Ukraine and NATO have reported an increase of Russian personnel and military equipment near Donetsk and Russian cross-border shelling. Why have Russian forces launched an attack? 

Russian forces are closing in on Ukraine’s capital, only days after Russia’s president authorized an all-out attack from the north, east, and south. In a pre-dawn TV broadcast on February 24, Putin said that Russia could not feel “secure, develop, or exist” because of the persistent threat posed by contemporary Ukraine. 

Airports and military headquarters were targeted first, followed by tanks and personnel arriving from Russia, Russian-annexed Crimea, and ally Belarus. 

Many of President Putin’s claims were inaccurate or illogical. He stated that his purpose was to defend those who had been subjected to bullying and genocide, as well as to “demilitarize and de-Nazify” Ukraine.

There has been no genocide in Ukraine, which is a thriving democracy governed by a Jewish president. 

“How could I possibly be a Nazi?” Volodymr Zelensky compared Russia’s invasion to Nazi Germany’s assault in World War II. Mr Putin’s remark was also condemned by Ukraine’s senior rabbi and the Auschwitz Memorial. 

The Germany’s U-Turn 

Chancellor Scholz promised an additional $113 billion (£84 billion) for the German army during an emergency parliamentary session on Ukraine on Sunday. 

In parliament, there was an audible wave of astonishment. Some MPs applauded, some booed, and still others seemed startled. 

Undaunted, Mr Scholz went on to pledge severe steps that would have been inconceivable only a week ago, such as a constitutional commitment to NATO’s military budget objective of 2% of GDP – and he verified that Germany would be sending weapons direct to Ukraine. Vladimir Putin has accomplished in a matter of days what NATO allies have been attempting for years: a significant boost in military spending in Germany. This is perhaps one of the most significant developments in Germany’s postwar foreign policy. 

This is How It All Began 

The military confrontation in Ukraine began in early 2014 and swiftly devolved into a protracted standoff, with frequent shelling and skirmishes taking place along the front line that separates Russian- and Ukrainian-controlled border territories in the east. Since Russia started a full-scale military invasion of Ukraine on February 24, 2022, combat has resulted in over a hundred civilian fatalities and tens of thousands of Ukrainians fleeing to neighboring nations, including Poland, a NATO member where US soldiers are ready to deploy and to offer assistance. 

Russia began mobilizing troops and military equipment near the border in Ukraine in October 2021, reigniting fears of an attack. Commercial satellite photos, social media posts, and publicly available intelligence from November and December 2021 revealed the movement of armor, missiles, and other heavy equipment toward Ukraine with no official justification. By December, over 100,000 Russian troops were stationed along the Russia-Ukraine border, and US intelligence sources warned that Russia may be plotting an assault in early 2022. 

In mid-December 2021, Russia’s foreign ministry issued a set of demands demanding that the United States and the North Atlantic Treaty Organization (NATO) cease all military activity in Eastern Europe and Central Asia, commit to opposing further NATO expansion toward Russia, and prevent further NATO expansion toward Russia and to prevent Ukraine from joining NATO in the future. The US and other NATO partners rejected these requests and warned Russia that if it attacked Ukraine, it would face harsh economic consequences. The US supplied further military aid to Ukraine, including ammunition, small guns, and other defensive weapons. 

In early February 2022, US President Joe Biden directed the deployment of around 3,000 US troops to Poland and Romania (NATO nations bordering Ukraine) to confront Russian forces stationed near its border with Ukraine and reassure NATO allies. Satellite images revealed Russia’s greatest force deployment to its border with Belarus since the Cold War’s conclusion. 

Negotiations between the US, Russia, and European nations, particularly France and Germany, failed to provide a settlement. While Russia issued a statement claiming to be drawing down a set number of troops, rumors arose of an increased Russian force presence on Ukraine’s border. 

Russia launched a full-fledged invasion of Ukraine in the early hours of Thursday. Since then, Russian forces have invaded Kyiv, threatening the country’s democratically elected government. Just days after Russia invaded Ukraine, the country’s official Twitter account issued a request for donations in bitcoin, Ethereum, and the stablecoin tether. 

The Ukrainian government’s and Vice Prime Minister Mykhailo Fedorov’s official Twitter accounts published wallet addresses for donations of bitcoin (BTC), ether (ETH), and the stablecoin tether (USDT). Some individuals, including Ethereum creator Vitalik Buterin, were first concerned that the tweet was sent by fraudsters who had hijacked the account. Mykhailo Fedorov, Ukraine’s vice prime minister, verified the plea for donations on Twitter and urged people to “Stand with Ukraine.” 

Buterin tweeted that he had received confirmation from the vice prime minister, but advised people to be cautious when submitting bitcoin donations. Initially, funds were coming into the specified locations due to concerns that the Ukrainian government account had been hacked. While Ethereum co-founder Vitalik Buterin questioned the legitimacy of the requests, the tweets were sent from verified accounts. (Buterin later stated that the accounts were “legit” and that he would be deleting his warning.) 

The Ukrainian government’s representatives were not immediately available for comment, and the country’s official website looked to be down. The Bitcoin wallet held around $500,000 or 13 BTC, while the Ethereum wallet held approximately $3.6 million or 1,090 ETH. However, there are signs that some bitcoin has already been withdrawn from the corresponding wallet, thus this may not be the whole amount provided. 

So far, the greatest gift of 100ETH (about $278,000) has come from Deepak Thapliyal, CEO of Chain.com, a blockchain technology startup, according to the ledger. “When I heard the Ukrainian government had asked cryptocurrency donations, I felt obligated to do my part to assist,” Thapiyal said. “Because cryptocurrency donations are borderless and almost aneous, I am hoping that the government there can tap into it as soon as possible to help the people in need.”

Since Russia’s invasion began on Thursday, several additional crypto entrepreneurs and venture capitalists have used Twitter to unite and show support for Ukraine. FTX CEO Sam Bankman-Fried earlier stated on Twitter that the business will provide $25 to any Ukrainian with an account on the exchange. 

“This is where blockchain excels; global fundraising,” said Binance’s Changpeng “CZ” Zhao. 

On his Twitter account, Tomicah Tillemann, who left venture capital company Andreessen Horowitz to become the global policy leader for Katie Haun’s new crypto fund, stated that “defending free and open societies may be the finest thing we ever do with our BTC and ETH.”

Wire transfers, which are used to send money overseas, may be expensive, sluggish, and unreliable, which is why, according to Tillemann, crypto contributions are advantageous in this case. “Digital assets are sometimes the only method to give rapid, direct assistance to individuals in international combat zones and humanitarian catastrophes,” he explained. 

“We’re not going to give it to anyone so they can purchase weapons,” he stated. According to Mashinsky, cryptocurrency provides as a suitable backup for ongoing business in Ukraine while the country’s banking system struggles. Among the organizations accepting cryptocurrency donations is Come Back Alive, a Ukrainian NGO that began crowdfunding to purchase bulletproof vests for the Ukrainian military following Russia’s annexation of Crimea in 2014.

According to its website, donations are now used to fund equipment and training for the country’s military services. Since 2018, Come Back Alive, an NGO that delivers military equipment to Ukraine, has accepted cryptocurrency donations. Since Russia’s invasion began, it has raised millions of dollars in digital currency

According to Elliptic, total crypto contributions to the Ukrainian government and NGOs supporting the military currently total $16.7 million. 

“Cryptoassets like Bitcoin have emerged as an essential alternative crowdfunding approach,” Elliptic’s chief scientist, Tom Robinson, said in a blog post on Sunday. “They enable rapid, cross-border donations, avoiding banking institutions that may prohibit funds to these organisations.” 

Mykhailo Fedorov, Ukraine’s Minister of Digital Transformation, has called on major cryptocurrency exchanges to cooperate and block payments to Russian users. “It’s critical not just to freeze addresses associated with Russian and Belarusian leaders, but also to undermine regular people,” Fedorov tweeted. 

On Saturday, the United States, its European allies, and Canada agreed to suspend select Russian banks from Swift, the interbank messaging system. They also agreed to prohibit Russia’s central bank from using its overseas reserves in ways that may jeopardize sanctions. 

Final Thoughts and Concerns 

The present crisis has strained relations between the United States and Russia and heightened the potential of a larger European conflict. Due to alliance security obligations, tensions between Russia and nearby NATO member nations are expected to rise, perhaps involving the United States. Furthermore, the Ukrainian conflict will have far-reaching consequences, particularly for US-China relations and future cooperation on critical issues such as arms control, cybersecurity, nuclear nonproliferation, energy security, counter-terrorism, and political solutions in Syria, Libya, and elsewhere. 

Typically, these organizations receive funds from private donors via bank wires or payment apps, but cryptocurrencies such as bitcoin have emerged as an important alternative funding method, allowing for quick, cross-border donations that avoid financial institutions that may block payments to Ukraine. 

However, the Ukrainian Ministry of Defense has said unequivocally that it would not accept cryptocurrency payments directly. That implies that, while the military appreciates donations for logistics and medical assistance, the contributions must go via legal channels. 

What The Crypto Is Being Used For 

Activists have used the crypto for a number of goals, including arming the Ukrainian army with military weapons, medical supplies and drones, as well as supporting the creation of a face recognition tool that indicates if someone is a Russian mercenary or spy. 

“Cryptocurrency is particularly suited to international fundraising because it does not respect national boundaries and is censorship-resistant — there is no central authority that can stop transactions, for example, in reaction to penalties,” said Elliptic’s chief scientist, Tom Robinson. 

“With the implicit sanction of governments, bitcoin is increasingly being used to crowdfund war,” said Robinson of Elliptic, which offers blockchain analytics tools to banks and several of the world’s major cryptocurrency platforms, including Binance and Circle. Cryptocurrency money raising is becoming an increasingly important component of current conflicts all around the world. 

Scammers, on the other hand, appear to be taking advantage of the present crisis in Ukraine by duping innocent people. According to Elliptic, at least one social media post was discovered to be a carbon duplicate of a valid tweet from an NGO, but with the author switching out the Bitcoin address, probably for one of their own. 

Other organizations assisting the Ukrainian opposition have requested donations in crypto assets such as nonfungible tokens, or NFTs. Russian and Ukrainian officials are preparing to meet for the first time since the invasion began, however it is unclear to what degree the scheduled discussions will be able to cease Russia’s assault. Meanwhile, President Putin directed the country’s nuclear-deterrence troops to be put on alert.

In a gesture of solidarity for Ukraine, the European Union will subsidize the purchase and supply of weaponry for the first time. The EU is also prohibiting Russian planes from flying over its territory. Following pressure from the U.K. government, BP stated it will abandon its almost 20 percent share in Rosneft. 

Western nations indicated they will shut off a number of Russian banks from the Swift network, an international payment system. The United States, the European Union, the United Kingdom, and Canada also stated that they would take steps to prevent Russia’s central bank from using its foreign reserves to bolster its currency and economy.

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