The Use of Cryptocurrency in the Russia-Ukraine Conflict

Despite the significant amount of cryptocurrency donations received by Ukraine in the past year, pro-Kremlin groups have also utilized digital currencies to acquire military equipment and disseminate propaganda.

Both sides of the conflict in the Russia-Ukraine war have utilized cryptocurrencies as a means to gain an advantage. Pro-Ukrainian organizations have received approximately $200 million in cryptocurrency donations, demonstrating the potential of borderless and uncensorable funds in emergency situations.

But the Russian side has taken advantage of crypto too: a total of about $5 million was raised by pro-Kremlin groups and propaganda outlets in the course of the invasion, as revealed by a recent Chainalysis report. These entities are small grassroots organizations that have used crypto to bypass Western financial sanctions.

“We're really looking at individual actors. So somebody who's on the front, somebody who's trying to help provide more military resources to the front [...] things like bulletproof vests or drones,”

As noted by Andrew Fierman, Head of Sanctions Strategy at Chainalysis and a co-author of the report.

However, these figures do not include ransomware attacks, which according to data from Chainalysis, resulted in over $450 million being paid to these entities last year, with a significant portion believed to be based in Russia. Some of these cybercriminal groups, such as Conti, have publicly endorsed the Russian government's war efforts.

“When it comes to ransomware payments, a lot of the time bad actors have some sort of political agendas behind what they're doing,” Fierman pointed out.

The Use of Cryptocurrency in the Russia-Ukraine Conflict: An Analysis of Both Sides' Strategies