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Russian Military Fundraisers Acquire $20 Million in Cryptocurrency Amid Sanctions Related to Ukraine Conflict: Elliptic
A year following the invasion of Ukraine, military fundraising organizations in Russia have accumulated millions of dollars in cryptocurrencies, despite sanctions enacted by the U.S. and other nations.
While it seems that Russian military procurement and disinformation groups have gathered approximately $4.2 million, which is significantly less than Ukraine’s over $212 million, research conducted by blockchain analytics firm Elliptic has revealed that the country has potentially raised as much as $20 million in cryptocurrencies.
Russian Military Groups Raise $20M in Crypto
Elliptic made these findings after NATO allies pinpointed and sanctioned new Russian financiers. A more thorough analysis indicated that half of the donated funds originated from U.S.-sanctioned entities.
Over 80% of the funds from the sanctioned pro-Russian entities were traced back to centralized crypto exchanges, indicating that these platforms were the primary destination for the assets. In addition to centralized exchanges, the entities also interacted with decentralized finance (DeFi) protocols, which included cross-chain bridges, non-fungible token (NFT) services, and decentralized exchanges (DEXs).
Among the sanctioned individuals and groups are those who have adopted crypto for various reasons. Some view digital assets as a means of fundraising, while others see them as an incentive. For example, U.S.-sanctioned individual Alexander Zhuchkovsky actively promoted the Terricon NFT project, which aimed to generate funds for the Russian war effort. However, the NFT marketplace OpenSea removed the collection before it could generate any revenue.
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Conversely, senior officials from the Donetsk People’s Republic revealed that they offer rewards for intelligence regarding Ukrainian military positions in bitcoin (BTC). The U.S.-sanctioned Task Force Rusich has also indicated that its supporters should bury deceased Ukrainian soldiers and request BTC from their families in exchange for information on the whereabouts of their bodies.
Growing Sanctions Risk
As global sanctions regimes have strengthened their stances against pro-Russian individuals and entities raising funds for military equipment, purported humanitarian organizations have unveiled crypto donation wallets, exposing connections to sanctioned individuals.
An example is the Russian Humanitarian Mission (ROM), which requests crypto donations through the wallets of Russian fighter Evgeny Poddubny, who is sanctioned by the United Kingdom, Canada, Australia, and Ukraine. Elliptic discovered that Poddubny receives funds from sanctioned and criminal platforms, including darknet markets Hydra and Shkaf, Garantex Exchange, and Bitzlato Exchange.
The flow of funds highlights the increasing sanctions risks to crypto services and the necessity for robust compliance frameworks in this emerging sector.
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