A year after invading Ukraine, Russia’s military fundraising groups have raised millions of dollars in cryptocurrencies despite sanctions imposed by the U.S. and other countries.
While it appears that Russian military procurement and disinformation groups have raised about $4.2 million, comparatively smaller than Ukraine’s over $212 million, research by blockchain analytics firm Elliptic has discovered that the nation has raised as much as $20 million in cryptocurrencies.
Russian Military Groups Raise $20M in Crypto
Elliptic made the discoveries after NATO allies identified and sanctioned new Russian financiers. A deeper analysis showed that half of the donated funds came through U.S.-sanctioned entities.
More than 80% of the funds from the sanctioned pro-Russian entities were traced to centralized crypto exchanges, showing that they were the most common destination for the assets. Besides centralized platforms, the entities also engaged with decentralized finance (DeFi) protocols, including cross-chain bridges, non-fungible token (NFT) services, and decentralized exchanges (DEXs).
Among the sanctioned entities are individuals and groups that have embraced crypto for several reasons. Some see digital assets as a source of fundraising, and others, as an incentive. For instance, U.S.-sanctioned individual Alexander Zhuchkovsky heavily promoted the Terricon NFT project aiming to raise funds for the Russian war effort. However, NFT marketplace OpenSea deleted the collection before it could raise any funds.
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On the other hand, senior officials at the Donetsk People’s Republic disclosed that they reward intelligence about Ukrainian military positions with bitcoin (BTC). U.S.-sanctioned Task Force Rusich has also suggested that its supporters bury dead Ukrainian soldiers and demand BTC from their families in exchange for information on the location of their bodies.
Growing Sanctions Risk
While global sanctions regimes have intensified their positions against pro-Russian individuals and entities raising money to acquire military equipment, supposedly humanitarian groups have released crypto donation wallets, revealing exposure to sanctioned individuals.
One example is the Russian Humanitarian Mission (ROM), which solicits crypto donations through the wallets of Russian fighter Evgeny Poddubny, who is sanctioned by the United Kingdom, Canada, Australia, and Ukraine. Elliptic found that Poddubny receives funds from sanctioned and criminal platforms like darknet markets Hydra and Shkaf, Garantex Exchange, and Bitzlato Exchange.
The movement of funds underscores growing sanctions risks to crypto services and the need for effective compliance regimes in the nascent sector.
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