How Ukraine Raised Over $55M in Crypto To Help Resist Russia – CNET

How Ukraine Raised Over $55M in Crypto To Help Resist Russia – CNET


This story is part of War in Ukraine, CNET’s coverage of events there and of the wider effects on the world.

As Russia launched an invasion into Ukraine on Feb. 24, Vitaliy Raskalov found himself 6,700 miles from home. When I spoke with the Kyiv-born photographer over Telegram on Sunday evening, he was in Mexico City, busily coordinating a shipment of bulletproof vests to his homeland. All of it will be paid for with cryptocurrency

Over the past six months, Raskalov has been selling a collection of his photographs as nonfungible tokens, or NFTs, on OpenSea, the biggest marketplace for such wares. Since the war began last week, all of the proceeds from the set, which consists of shots taken atop skyscrapers and other wincingly tall structures, are being donated to Ukraine’s resistance. 

“I’m out of the country, I’m not able to take weapons and defend my country,” Raskalov said, “but at the same time I’m able to collect money, to raise money, to help.” He said he’d so far raised about 4 ether, or just over $10,000, which he says is going toward equipment like helmets, flashlights and those bulletproof vests. 

Ukraine is one of the world’s biggest adopters of cryptocurrency, ranking behind only Vietnam, India and Pakistan, according to Chainalysis. Elliptic, another crypto data firm, says that donations to groups countering Russian aggression skyrocketed in the second half of last year, with over $550,000 worth of cryptocurrencies raised in 2021 compared to $6,000 in 2020. 

Since Russia began military operations in Ukraine last week, $55.7 million has been raised, according to Elliptic data

Much of that is courtesy of donations made directly to the Ukrainian government. Three days after Russia’s invasion, Ukraine’s  minister for digital transformation, Mykhailo Fedorov, tweeted out wallet addresses into which people could directly donate bitcoin, ether and tether, a stablecoin pegged to the US dollar. Ukraine’s official Twitter account posted the same addresses. Over $47 million has since been donated to these wallets, says Elliptic. The success could change fundraising, both in Ukraine and abroad.

“In the last four days I’m simply shocked,” Raskalov said. “I’m so happy with that. At the same time, I’m so upset. A small NFT community and Twitter raised more than $10 million. Most of the countries of the European Union didn’t do anything.” 

The European Union says it plans to send 500 million euros ($550 million) in aid.

Apart from direct donations to the Ukranian government, millions more have been raised by NGOs and initiatives similar to Raskalov’s. Notable is UkraineDAO (a decentralized autonomous organization is a group where token owners can vote on how funds are spent), which, backed by Russian punk rock group PussyRiot, raised over $3 million in ether — and then another $6.75 million via the auctioning of a Ukranian flag sold as an NFT.


Raskalov sells photographs taken atop skyscrapers and other frighteningly large structures as NFTs, with proceeds going toward Ukraine’s resistance effort. 


NFTs for peace

Seeing all of these cryptocurrency fundraisers, 23-year-old NFT trader Andrew Wang last Thursday tweeted out a thought to his 140,000 followers. What if an NFT collection was created to raise funds?

“We have all these tools. We have crypto, we have communities, we have art, we have smart contracts,” a sleep-deprived Wang said to me via Zoom on Sunday. (A smart contract is one that automatically executes when certain criteria are met. Most NFT transactions take place using one.) “Instead of just raising crypto, what if we brought artists together, wrote a smart contract and deployed it to raise ether?”

The result is Reli3f, a group of Wang, five other organizers and developers and 37 artists who contributed NFT art. The 3 in the name is a reference to Web3, a term that describes an internet in which blockchain technologies like crypto and NFTs are deeply integrated. Many of the project’s contributing artists are Ukrainian, including Raskalov, who supplied a photograph he took of Kyiv. Wang described Reli3f as an experiment, but that description belies how quickly it achieved success. 

Wang sent the tweet out on the 24th on February, and a group chat filled with interested organizers was quickly formed. In the 24 hours that followed, 37 artists had agreed to contribute one piece each. The collection launched that night, consisting of 200 copies of 37 different NFTs, each of which sold for 0.05 ether, or $130. It immediately sold out, raising 371 ether, or $980,000, in 30 seconds. On Sunday night, in the hours before he spoke to me, Wang and the team went about distributing those funds. Reli3f sent three organizations 61 ether ($160,000) each: Military support group Come Back Alive, local media vetted by the Kyiv Independent publication and medical assistance charity Hospitallers.

“We are looking into ways of doing this again, and doing it better,” Wang said. “What we did was an experiment, and the more you experiment the better you get at it.”

After the funds were deployed, Reli3f created a Twitter thread including links to the transactions, which could be vetted for legitimacy. The smart contract drawn up by the team was also up for scrutiny. Wang hopes the transparency that blockchains afford will be used to improve charity in the future. 

“I think of Web3 as neutral. It’s about tools, and you can use tools for good and for bad,” he said, explaining that he hopes Reli3f can stand as an example of the former. “We want to say, this is part and parcel of Web3. We put all of the transaction hashes in that thread, explained to people why we got certain numbers, and we put that plain to see. You can see where the money goes.” 

The extra benefit of using cryptocurrency, Wang said, is avoiding bank transfer limits that have been put in place. Several banks in Ukraine, particularly in the east, have put restrictions on how much money citizens can withdraw or move around. The National Bank of Ukraine has a withdrawal limit of 100,000 Ukrainian hryvnia, roughly $3,350, as well as restrictions on exchanging local currency for foreign ones. 

The issue is that many organizations don’t have wallets set up. After the extraordinary success of Ukraine’s government in raising funds via cryptocurrency wallets, that may soon change. 


Some of the NFTs that appear on Reli3f’s OpenSea page. After the public sale, royalties from OpenSea buys will go towards fundraising for Ukraine’s resistance. 


Crypto, for good and for ill

The use of cryptocurrency in Ukraine is evidence of the technology’s benefits: It’s a spontaneous, international fundraising effort where large sums of money, unencumbered by weighty bureaucracies, have been transferred to local organizations quickly. Yet downsides are apparent, too. 

Bitcoin’s and ether’s ability to bypass institutional restrictions can be used on both sides. The US and EU have levied sweeping sanctions against Russian financial institutions, exports and key figures in both industry and government. Squeeze the economy, the hope goes, and President Vladimir Putin will be forced to the negotiation table. Some worry that the effect will be dulled by cryptocurrencies, which can often circumvent such restrictions.

“Russia is digging deep into cryptocurrencies to trade with international partners and evade sanctions,” wrote Robert Huish, Dalhousie University’s associate professor in international development studies, in a recent essay. Huish notes that Siberia is a hub for cryptocurrency mining, which gives Russia a reliable internal supply.

Apart from systemic abuse of the anonymity inherent in cryptocurrencies, there’s also been the expected array of scams. Phony wallet addresses claiming to be for charities have been circulated. A warning had to be issued on Twitter after several OpenSea collections imitating Reli3f popped up on OpenSea. 

Still, Raskalov is optimistic — and about more than just cryptocurrency. “When we win the war, when we start to build our country again, cryptocurrency is going to be one of our biggest sources of income.”   

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