Crypto Fundraising by Pro-Russian Groups Continues as More Sanctions Put in Place

Groups in Russia are reportedly raising money in crypto to support paramilitary operations and circumvent U.S. sanctions while the war with Ukraine continues.

As of Sept. 22, these fundraising groups had raised $400,000 in cryptocurrency since the invasion began on Feb. 24, according to a report by TRM Labs cited by CNBC.

Telegram becomes the crypto fundraising platform of choice

The study found that groups are providing options for people to donate money through the encrypted messaging app Telegram. The fund is subsequently used to finance combat training at sites near the Ukrainian border, supply Russian-affiliated militia groups, and fund thermal imaging equipment and radios, as per the report.

In addition, as per a CNBC report, the Novorossia Aid Coordinating Center gathered roughly $21,000 in cryptocurrency, primarily bitcoin, intending to purchase drones to support Russian operations.

According to Ari Redbord, head of legal and government affairs at TRM Labs, these groups are probably using exchanges that don’t always adhere to anti-money laundering and other standards.

“They’re probably using non-compliant exchanges to off-ramp those funds [into fiat currency],” Redbord told CNBC.

Fresh sanctions by the EU

Meanwhile, the European Union proposed a new round of sanctions on Moscow on the back of the country’s war escalation. A source familiar with the situation recently told Bloomberg the new sanctions extend to crypto, limiting European companies from offering cryptocurrency wallet, account, or custody services to Russian nationals and entities based in Russia.

Despite the global sanctions, a Russian official confirmed in September that a bill on digital currencies drafted by the Finance Ministry should establish a framework for crypto transactions. Ivan Chebeskov of the Financial Policy Department of the Finance Ministry stated that a list of currencies and counterparty nations for a settlement framework would be outlined in the bill.

“I think an interesting part of this story is that crypto is just a payment method in these cases. It’s a way to move funds. And here’s an example of it being used for good and example of it being used for bad in this context,” Redbord said.

Amid the war, Ukrainian crypto exchanges also reported an increase. Viktor Kochetov, CEO of the Kyrrex crypto exchange, previously told Be[In]Crypto that the crypto business kept his financial ecosystem afloat and has grown it while immersed in war.

According to Mykhailo Fedorov, minister of digital transformation, the government of Ukraine utilized some of the $54 million earned via cryptocurrencies to buy arms and weapons. The tweet highlighted that there is still $6 million left to spend.

Chainalysis also noted in its September report that Ukraine ranked in the top 10 emerging markets dominating the Global Crypto Adoption Index and the top 20 globally.