Ukraine Spends $15M of Donated Crypto on Military Gear

As cryptocurrency donations continue to pour in, the Ukrainian government is being transparent on how it is using the funds.

Ukraine has spent $15M of its cryptocurrency donations on combat gear, including bulletproof vests delivered on Friday, says Alex Bornyakov, deputy minister of Digital Transformation of Ukraine.

The Digital Transformation ministry, formed two years ago to upgrade the country’s information-technology industry and provide high-speed internet access, has managed to find military suppliers in Europe and the U.S. for bulletproof vests, food, bandages, and night-vision equipment not even two days into the Russian incursion of Ukraine. While some suppliers accepted crypto, others accept only euros or dollars, necessitating the conversion of some crypto holdings into these fiat currencies. 

Bornyakov said in a Zoom interview with Bloomberg that the government expects to double the crypto donations received so far (56.8M) in the next few days. Most of the money donated came from Bitcoin and Ether. In contrast, smaller amounts came in the form of stablecoin Tether, Polkadot ($5.8M), Solana, and even from NFTs, including one CryptoPunk worth over $200K and the Julian Assange NFTs created by multidisciplinary artist Pak worth $1.86M.

The minister said that “most donations come from people,” while some companies are also stepping up. Considering companies that have made donations, one of them is Aid for Ukraine, a fund aiming to convert crypto into U.S. dollars to spend in Ukraine, with the help of U.S.-based exchange FTX. The fund’s crypto will be converted into dollars for deposit into Ukraine’s central bank. The fund was started by Solana co-founder Anatoly Yakovenko and Sergey Vasylchuk, CEO of crypto staking company Everstake. Vasylchuk had previously worked with the Ukrainian government to develop a Central Bank Digital Currency.

Birnyakob studied Public Administration at Columbia University and founded an ad-technology provider, amongst other startups. The ministry is underpinning the country’s information technology infrastructure to ensure the progression of government work, even as the Russian attack continues. It is also continuing its work of gathering and using crypto funds.

NFT collection in the works

Bornyakov said that the ministry has enlisted two companies to create an NFT collection, which may be available in under two weeks to raise funds for the continued defense of Ukraine. It is not yet been established whether the NFTs will be limited and what they will look like.

The ministry has no plans to sell CryptoPunk #5364, which depicts an 8-bit image of a character wearing a blue bandana and smoking a cigarette, nor any of the many NFTs it received as donations. The CryptoPunk last sold for $43,000 in 2021. The ministry has not used it, since selling it has not proven easy. “We are going to work with NFTs a little bit later, focused on things we can deal with right now. There’s no time to figure out how to convert them.”

Many fraudsters taking advantage

Fraudsters have exploited this situation by targeting people that want to help Ukraine, putting out inauthentic addresses for people to send funds. On Saturday, Feb. 26, 2022, the Ukrainian government appealed to the public for crypto donations, prompting Vitalik Buterin, Ethereum co-founder, to urge users not to send funds to addresses without ensuring that it’s not a scammers address. “This info environment is as hostile as it gets, exercise extreme vigilance.”

However, donations continued to pour in, perhaps finally creating a real-world use case for crypto when the banking system fails to support urgent needs. The time it takes to transfer bitcoin or ether is far less than the time required for traditional remittance payments to be cleared.

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