Of the $26 million in crypto the Ukrainian government has raised amid the Russian invasion, at least $14 million has already been disbursed, according to Michael Chobanian, founder of Kiev-based crypto exchange Kuna, who has been a central figure in the fundraising effort. Crypto, he said on CoinDesk TV’s “First Mover,” has been a huge boon to the nation’s military and civilians.
That might go a long way in assuaging fears about crypto’s place in the war. Authorities across the globe are worried that non-state monetary networks like Bitcoin and Ethereum could enable Russia to evade economic sanction, while others think decentralized networks could help to raise funds quickly for a besieged nation.
“I want to use this opportunity to thank all the crypto guys who already helped us,” Chobanian said.
Transactions on most cryptocurrency networks are publicly viewable – one of the guarantees and essential attributes of the underlying blockchain technology. But that doesn’t always mean it’s clear how the funds are being used.
Ukraine, the second-poorest country in Europe based on gross national income per capita, has a long history of corruption. Some people are concerned that donations made in crypto, although traceable, may not benefit the intended recipients.
“We're doing it really efficiently,” Chobanian added. “The majority of spending is actually done in crypto.” He said he gives regular updates on where donations come from and go to every three hours on Twitter.
Chobanian has helped set up two charitable funds to aid Ukraine’s war effort and war-affected population, he said. The Crypto Fund of Ukraine, spun up two days ago, has primarily been used to buy food, gas, medical supplies and firearms for civilians and to help evacuate people, he said.
The second wallet, which is being coordinated by the Ministry of Digital Transformation, is funding the army. Chobanian’s exchange platform is assisting the government in converting crypto to fiat money, as “the government doesn't know how to properly manage the crypto,” he said.
That said, Ukraine's Defense Ministry is deciding on where donated crypto funds are going, CoinDesk previously reported.
Several high-profile crypto entrepreneurs have made big monetary contributions, including Polkadot and Ethereum co-founder Gavin Wood, Tron founder Justin Sun and Ethereum co-creator Vitalik Buterin, who was born in Russia and has spoken out against the war.
However, most of the funds made in lesser-known cryptocurrencies like DOT and tron are being converted into bitcoin and ether through the Kuna exchange, which has become central to these charitable efforts. “That’s the preferred method for most,” Chobanian said.
Kuna is working to ensure incoming donations are “clean,” and blacklisting suspicious transactions. “If it comes from the dark web, there is not much I can do with it later,” Chobanian said.
The crypto is then sent to cold storage, and guarded using a multisig, a type of wallet that involves multiple parties.
Last week, Chobanian told “First Mover” hosts the exchange was having difficulty meeting surging demand for the U.S. dollar-denominated cryptocurrency tether, or USDT. Wealthy clients had adopted the so-called stablecoin as a “safe haven,” he said. He gave that interview from his car.
Indeed, the invasion has severely affected Ukrainians. Speaking personally, Chobanian said his life has been upturned.
“You could look at whatever I’m wearing. This is pretty much all I have left,” he said. “I have two cars left. And I have my crypto. That’s pretty much it.”
Everyday Russian civilians have also been affected by the war. In response to Russian aggression, Western powers have levied strict financial sanctions on the country – including taking the unprecedented step to cut major financial institutions to the international SWIFT payments network.
The ruble has since cratered, and there’s evidence of many ATMs running out of cash. Now, there are calls for crypto exchanges, a small part of the global financial system, to block Russian users. Many have already frozen accounts thought to be associated with Russia oligarchs, as part of Western sanctions.
Ukraine Minister of Digital Transformation Mykhailo Fedorov, for instance, has asked that all major crypto exchanges block addresses of Russian users.
Kuna, alongside other cryptocurrency exchanges, has blocked the trading in digital rubles. But Chobanian sees blocking crypto from the Russian population as a bad idea.
“Being a crypto anarchist, I strongly oppose that,” he said. “Being Ukrainian who’s homeland is being bombed right now, it’s devastating. I have to balance between the rational and the emotional.”
That said, he does support freezing accounts tied to government officials. Further, due to unclear regulations, U.S. users are barred from his platform.
Does that mitigate the purpose of open, apolitical financial networks?
Pragmatically speaking, crypto has worked to fill a gap – like in quickly raising funds for Ukrainians. And it works because it’s fast, and in some respects, better than the alternative. “If you want to send money to Ukraine, to any government body, you have to do it via SWIFT, and SWIFT takes time. It’s not instant,” he said.
Additionally, crypto’s success is tied to accessibility. “There is no one to ask whether you can send your money or not,” Chobanian said about having to navigate the banking system, especially when larger sums of money are involved.
“If you own your own keys, you’re in charge.”
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.