Cryptocurrency Is Funding Ukraine's Defense—and Its Hacktivists

Cryptocurrency may never have fulfilled its promise as the quotidian currency for buying a cup of coffee. But it's proven to be a powerful, regulation-resistant means of sending large amounts of money anywhere in the world. That now includes war zones—or more specifically, Ukraine, a country whose long-burning, limited war with Russia and pro-Russian separatists may be about to rapidly expand.

Cryptocurrency payments to military and hacktivist groups in Ukraine aimed at countering Russian aggression against the country spiked sharply in the second half of 2021, according to cryptocurrency tracing and blockchain analysis firm Elliptic. Crowdfunded payments to those organizations in bitcoin, litecoin, ether, and other cryptocurrencies the company tracks reached a total value of around $550,000 last year, compared with just $6,000 or so in 2020 and less still in previous years, even at the height of Russia's 2014 invasion of the country.

That half a million dollars is no doubt just a small fraction of the total funds Ukrainian defense and hacktivism groups have raised by more traditional means amid Russia's recent escalations, says Tom Robinson, Elliptic's founder. But the sudden rise of cryptocurrency within these global donations demonstrates how borderless, often unregulated crypto payments could fund organizations engaged in future conflicts. “Crypto is censorship-resistant, so there's no chance they're going to get their funds seized or their account shut down, like might happen with PayPal, and it's also more amenable to cross-border donations,” says Robinson. “It’s proved itself to be a robust way to fund wars.”