In light of Russia’s invasion of Ukraine, humanitarian and military-adjacent organizations have received millions of dollars in charitable contributions from overseas – a massive outpouring of international support for Ukraine’s resistance.
This article is excerpted from The Node, CoinDesk's daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.
And while (in most cases) fiat money remains a viable way to support Ukraine, a decent amount of the donations has come in the form of cryptocurrency:
- The Ukrainian government has been soliciting crypto donations from its official Twitter account in the form of bitcoin, ether and the dollar-denominated stablecoin tether, according to the founder of Kuna, the Ukrainian exchange reportedly facilitating the donations. That money is being used to support evacuees and “local military personnel” with drones, heat-vision goggles and gas. The blockchain analytics firm Elliptic reported that the Ukrainian government has raised around $14 million in crypto, so far.
- A community-led fundraising effort called UkraineDAO has followed suit, organizing a non-fungible token (NFT) auction on behalf of a Ukrainian non-government organization called Come Back Alive, which was kicked off Patreon for violating the network’s terms of service. The crowdfunding platform said the organization was “financ[ing] and train[ing] military personnel,” and Come Back Alive’s website promotes training programs for snipers. The NFT auction is ongoing, and has already raised over $3.5 million in ETH.
- A brand new organization called RELI3F, spearheaded by prominent crypto influencers like Andrew Wang, raised over $1 million in ETH from a hastily assembled NFT collection. On Twitter, the group said it’s split about half of that money among Come Back Alive, "local Ukrainian media vetted by [a local English-language news organization called The Kyiv Independent]" and the Hospitallers medical battalion.
- Murat Pak, an NFT artist who recently said that politics “bores” him, and that “none of [his] moves are political,” nonetheless claims to have donated $1.8 million in ETH “to human rights” in Ukraine.
As always with crypto, shills and opportunists abound. Gavin Wood, founder of the cryptocurrency polkadot (DOT), suggested he would donate $5 million if the government promoted the token by “post[ing] a DOT address.” In other words, he would donate if the government would accept his token. A few days ago, Vice spotlighted a deeply tasteless but also probably well-meaning meme depicting a Bored Ape NFT expressing support for the people of Ukraine.
Apes aside, the question remains: Why crypto? It’s not as if there aren’t other ways to donate – the Ukraine Twitter account posted information about direct money transfers with fiat currency, and Come Back Alive accepts contributions via the SWIFT-linked international banking system.
Ukraine, unlike Russia, has the support of the vast majority of the world. It’s Russia that’s lost some access to SWIFT, and it’s Russia whose banks and corporate sector are being aggressively sanctioned by Western governments (with notable exceptions being made for its oil conglomerates). Ordinary Russians, the vast majority of whom have nothing to do with this war, are now facing down potential bank runs as the ruble collapses.
My sense is that the reason for all the donations in ETH has to do with the broader buzz around crypto, and the habits already developed by investors and entrepreneurs in this sector. Fundraiser DAOs (decentralized autonomous organizations) are good at raising huge amounts of money extremely quickly. It’s not about “censorship-resistance” and instant transfers as much as it’s about keeping money in the system. If you’re already dealing with crypto on a regular basis, it makes sense to send your charitable contributions in crypto, too.
It’s problematic for a few reasons, one of which has to do with Ethereum’s ludicrously high gas fees – you’re getting far less bang for your buck, when you donate with Ethereum than when you donate with fiat money.
There’s also the issue of wishy-washy middlemen: Why attempt a group auction via a DAO, or pick up an NFT, rather than make a direct donation to the organization of your choice? All it’s doing, really, is putting a mediator in charge of your money (sort of ironic, for an industry premised on doing away with mediators).
A strange caveat with UkraineDAO is that donors to the group bidding party will eventually receive $LOVE tokens, apportioned pro rata according to what they put in (donate 1% of the ETH in the pool, and you’ll get 1% of the $LOVE tokens). The official website for UkraineDAO insists that these tokens “have NO utility nor value, but are a beautiful testament and reminder of your contribution to a noble cause,” but methinks the DAO doth protest too much. $LOVE tokens are just ERC-20s, bespoke cryptocurrencies on the Ethereum network. They can trade on decentralized exchanges like Uniswap, if they’re liquid enough; speculators could eventually swoop in and pump the price of $LOVE, generating a market outside of the DAO’s control.
None of this is exactly predatory, but these kinds of theatrics might confuse some prospective donors. If you want to give money, you can just give money – direct donations are very much still on the table.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.