Bitcoin and other cryptocurrencies are helping refugees quickly transit money across borders, making it possible to buy arms for Ukraine, and potentially even assisting Russians in evading sanctions.
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Cryptocurrencies are being used by both sides in the conflict triggered by Russia’s invasion of Ukraine. Their ability to cross borders illegally is helping Ukrainian refugees flee the country with their money, but it could also provide a way for Russian elites to avoid severe economic sanctions.
These were made accessible to the Ukrainian government in a matter of minutes, unlike funds raised by charities and non-governmental organisations. Other crowdfunding campaigns haven’t been as straightforward. Because fundraisers linked to weapons violate Patreon’s policies—the various levels of donation were called things like “bullet” and “bomb”—the online fundraising service Patreon block an account raising money for Ukraine that had drawn more than 14,000 donors and pledge a monthly total of more than £300,000. Instead, Come Back Alive, the organisation that ran the Patreon page, eventually sold a Ukrainian flag NFT (non-fungible token) for about £5 million to raise money.
Dmytro, a Lviv-based computer programmer who works for a cryptocurrency mining business and requested that his last name not be use for security concerns, told New Scientist that he had used bitcoin to get away from the conflict in Ukraine.
On February 24, he awoke to learn about the invasion and discover long lines and cash machine payouts that were restrict by emergency laws. Additionally, international bank transfers were prohibit. He was able to cross the border into Poland with his girlfriend and convert all of his cash into bitcoin. He claims that he would have otherwise been draft into the army. my life was saved by bitcoin.
UK intelligence organisations are looking at bitcoin exchanges.
Dmytro is currently in Poland, where he is utilising his technical expertise to direct a team of 50 volunteers who are discrediting online Russian propaganda and inciting Russians to resist the war. We have our truth, whilst they have their propaganda. And when people learn the truth, they will undoubtedly attend protests, he asserts. “In this manner, we can put an early end to the battle.”
As the value of the rouble declines due to international sanctions that have choked Russia’s economy, Russians have also started switching their money to bitcoin. Because of the extreme demand, bitcoin has been trading there at a premium over market rates. Simply put, there are more buyers looking than sellers trying to sell who can or would accept Russian roubles.
There are worries that the wealthy elite in Russia and those associated with Putin would employ similar strategies to withdraw their money from the nation in order to get around sanctions. But according to George Lopez at the University of Notre Dame in Indiana, any Russian oligarch using a Swiss bank – long a preferred storage choice due to the country’s strict banking privacy laws – and hoping to cash in millions of dollars worth of bitcoin would likely be detect by many attentive Western governments.
He thinks Russia hasn’t had time to get ready, but North Korea has been able to build intricate worldwide networks to get over sanctions and move money and goods using bitcoin. Every bank is quite wary of reasonably significant transfers from people wanting to exchange their money into euros or dollars who have never been a customer before, he claims.
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According to Lopez, Russian business are now cut off from the global banking system and may find it challenging to deal with overseas customers who pay with bitcoin because the recipient will eventually have to convert the payment into their own currency, which would result in financial inquiries. Simply said, it is becoming more difficult to deposit big sums of mysterious money into banks in light of the current monitoring.
Christine Lagarde, president of the European Central Bank, asked the European Union to move forward with its Markets in Crypto-Assets legislation to support efforts to stop Russian money from vanishing into bitcoin. Mykhailo Fedorov, the vice-premier of Ukraine, has also urged bitcoin exchanges to block Russian accounts. He tweeted that it was crucial to “sabotage ordinary users, not just the addresses linked to Russian and Belarusian politicians.”
Few are willing to take stronger action, leaving the libertarian-leaning industry standing alone as companies like Apple, Nike, and Ford withdraw services and products from Russia, despite the fact that some exchanges, like Gopax, have blocked accounts belonging to Russians on official sanction lists.
A representative for the US-based cryptocurrency exchange Kraken told New Scientist that the company was adhering to all restrictions imposed on Russia, but the CEO of the business, Jesse Powell, stated on Twitter that the company would not go any further. Step one would be to freeze all US accounts, he added, “if we were going to voluntarily freeze financial accounts of inhabitants of countries unjustly assaulting and instigating war around the world.” For us, that isn’t really a practical business option.
Since the beginning of the year until March 4, the value of the rouble in relation to the US dollar has decreased by 20%. Even though there have been reports of bitcoin prices rising since the day of the invasion—they are up 20.7% as of March 4—it had experienced a sharp decline the week before. Although it is difficult to directly link changes in bitcoin’s price to the invasion of Ukraine, cryptocurrencies are proving to be a more reliable investment than the Russian rouble in this crisis
