Around $10 million in crypto donations sent to the Ukrainian government has already been spent.
The Ukrainian government is purchasing critical supplies, including gas, food and military equipment, using cryptocurrencies donated as the country stands against a Russian invasion. Around $10 million has already been spent.
The donations are being distributed from the government’s digital wallets, set up by Kyiv-based crypto exchange Kuna, to other digital wallets before being spent, blockchain data show. By Monday morning, around $6.5 million worth of ether had been moved out of a government wallet to the exchange.
"We are evacuating people so we are sending money to buy petrol, to buy food and water for the people who are evacuating. We are sending some money to the local military personnel who can buy some supplies locally,” Kuna founder Michael Chobanian told CoinDesk. The government is also buying drones, heat vision goggles and petrol, he said.
CoinDesk has been tracking the inflow of more than $16 million of cryptocurrencies into three digital wallets associated with Ukraine’s defense against the Russian invasion. One wallet, set up by a local nonprofit, had raised over $7 million in bitcoin at publication time. The two others (one bitcoin and another ether) set up by Kuna on behalf of the Ukrainian government on Friday, had raised more than $8 million by Sunday.
Chobanian shared a report on his Twitter account on Monday showing the total crypto support for the government of Ukraine through a variety of cryptocurrencies and stablecoins has surpassed $12 million. Elliptic, which helps track transactions on blockchains, said Monday that government and nongovernmental organizations had reached $20 million.
The funds were collected as Russia closed in on Ukraine’s capital, Kyiv. On Saturday, Western nations agreed to impose tougher financial sanctions on Russia in an effort to deter the conflict. On Sunday, Ukrainian President Volodymyr Zelenskyy agreed to start peace talks just as Russian President Vladimir Putin put the country's nuclear deterrence force on high alert.
Bitcoin donations raised by the government are being distributed quite quickly, blockchain data shows. Almost all of the bitcoin collected, amounting to about $4 million, have already been sent to various wallets.
“We're managing to buy all of this stuff in Europe using crypto. A lot of my friends in the crypto industry are helping out. We're sending them crypto, they're paying for [things] in euros,” Chobanian said.
Chobanian said on Sunday that a majority of the outgoing bitcoin is for small transactions and that the government is saving funds for some larger purchases. At first, bitcoin was sent out of the government wallet in small amounts (typically under $100). On Sunday, around $26,000 worth of bitcoin left the wallet in one transaction. By publication time on Monday, only around $66,000 of ether remained in the government’s wallet, according to transaction data on Etherscan.
Chobanian says vendors are stepping up to accept crypto in exchange for supplies and crypto is proving to be more efficient than traditional payment methods.
“It's really difficult to [send money] using traditional methods. First of all, it takes a lot of time. Secondly, it's a lot of bureaucracy and so on. Here, we are really fast. So we receive money and we spend it almost immediately,” Chobanian said.
On Sunday, Chobanian said the government is also planning to spend the funds on some larger purchases, though he didn't specify what those would be. Judging from the substantial draining of funds from the Ethereum wallet on Monday, larger purchases are being made.
“We are just like a crypto bank for the government at the moment,” he said.
Not everyone’s having an easy time with spending. Almost $7 million in bitcoin is sitting in a wallet associated with a Ukrainian nonprofit named “Come Back Alive.” Almost all the funds were raised in a matter of days, specifically to aid Ukraine’s military. Only $1.6 million worth of bitcoin have left the wallet. In other words, even at a moment of crisis, millions of dollars remain unmoved. The charity didn't respond to requests for comment by publication time.
Meanwhile, Ukraine’s central bank has suspended the country’s currency market and limited cash withdrawals. Chobanian says there are efforts to remove these restrictions to improve the efficient redistribution of money.
All crypto exchanges operating in Ukraine are doing pretty much the same thing, Chobanian said.
“We're united, We understand that if we don't do it right now, that's it. We don't have any future for our country,” he said.