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  • Writer's pictureEvîn Cheikosman

Unspooling the Thread: Crypto & Ukraine

Updated: Jan 26, 2023



We at the BL4SG Center normally use the Bchain Blog to shine a light on established projects with a clear mission of combatting a problem facing local and global communities. This week‘s Tuesday Project Spotlight is no different. However, we would be remiss if we did not also take this opportunity to provide an overview how the war in Ukraine has touched the crypto community. That said, because we are lawyers by training, we have no interest in punditry. Rather than editorialize, we’re going to, as the saying goes “stick to the facts, ma’am.” Below, in the form of a timeline, is what we know about donating crypto to Ukraine.

 

Monday, February 21, 2022


Eastern Europe is moving closer to war after Russian President Vladimir Putin recognized the independence of two breakaway regions in Ukraine. The White House said it will impose financial sanctions in response.

Russian President Vladimir Putin ordered the deployment of troops to two breakaway regions in eastern Ukraine after recognising them as independent on Monday, accelerating a crisis the West fears could unleash a major war.
 

Thursday, February, 24, 2022


Video shows Russian tanks crossing the border, airstrikes hitting several cities and long lines of cars fleeing after Putin announced a military operation in Ukraine. The U.S. and its allies condemned the invasion and announced further action against Russia.

By this time, many news outlets, like the The Seattle Times, begin publishing stories which include lists of organizations accepting donations in support of the people of Ukraine. One such organization that received quite a bit of press was Come Back Alive.

Come Back Alive describes itself as follows:

Our Foundation stands with the Ukrainian Armed Forces by funding purely defensive initiatives. Since 2014, we have supplied nearly 1,000 thermal scopes and over 250 reconnaissance drones. Along with this material support, we’ve supported technological advancements with 1,500 tablets containing «Armor» artillery calculation software. Come Back Alive also conducts training to give our troops broader skill sets. Since 2015, we’ve introduced courses for medical care workers, artillerymen, snipers, sappers, and defense analysts. After arriving home from the front line of defense, our troops receive support with sports rehabilitation and the development of veteran-run businesses. Our organization does not use funds to buy weaponry. Our mission is purely to supply technology, training, and ammunition to help save the lives of Ukrainians and help our soldiers defend Ukraine.

Many people, eager to help, turned to Come Back Alive’s Patreon page to show their support.


funding military conflict via patreon was definitely not on my dystopia bingo card pic.twitter.com/Q519Bi1pNl — aaron (@paradoomer) February 24, 2022

This tweet, if no longer available via Twitter, or the above embed, can be found here on the Internet Archive.

 

Friday, February 25, 2022

In an official blog post, Patreon announced the following:

This morning, Patreon suspended an organisation’s page from our site called “Come Back Alive” because it violated our policies. The website of the organisation says they use contributions to finance and train military personnel. Specifically, they claim to use funds they received for the following: “funds were used for… more than 1,500 tablets with software for Gunnya-Armor artillerymen, 230 quadcopters, 45 mobile surveillance systems…, and more than 60 military vehicles.” “The organisation also initiates the creation and implementation of new technical solutions,” including “models of artillery weapons.” “trained 350 snipers, more than 2,000 sappers and more than 3,000 gunners, and training is being conducted to train UAV operators.” We don’t allow Patreon to be used for funding weapons or military activity. It is a violation of our policies, and so we have removed the page. All remaining funds in the account will be refunded to contributors. For those still looking to help, Ukrainian journalists have recommended several charities and platforms that would benefit from donations, such as the Ukrainian Red Cross Society, Voices of Children, and Revived Soldiers Ukraine. There are also 3,000+ Ukrainian creators on Patreon – and thousands more using other platforms – who would benefit from our support. We are shocked and heartbroken at the invasion of Ukraine. Like so many around the world, we are watching this tragedy closely and wishing for the safety of the Ukrainian people in harm’s way.
 

Saturday, February 26, 2022

With sites like Patreon blocking anything related to the funding of Ukraine’s military forces, the Ukrainian government decided to take a novel approach; a direct appeal.


Stand with the people of Ukraine. Now accepting cryptocurrency donations. Bitcoin, Ethereum and USDT. BTC – 357a3So9CbsNfBBgFYACGvxxS6tMaDoa1P ETH and USDT (ERC-20) – 0x165CD37b4C644C2921454429E7F9358d18A45e14 — Ukraine / Україна (@Ukraine) February 26, 2022

This is the verified Twitter account for the country of Ukraine. This tweet, if no longer available via Twitter, or the above embed, can be found here on the Internet Archive.

 

Stand with the people of Ukraine Now accepting cryptocurrency donations. Ethereum. Bitcoin and Tether (USDTtrc20) BTC — 357a3So9CbsNfBBgFYACGvxxS6tMaDoa1P ETH — 0x165CD37b4C644C2921454429E7F9358d18A45e14 USDT (trc20) — TEFccmfQ38cZS1DTZVhsxKVDckA8Y6VfCy — Mykhailo Fedorov (@FedorovMykhailo) February 26, 2022

Mykhailo Fedorov is Vice Prime Minister of Ukraine and Minister of Digital Transformation of Ukraine. He tweets at @FedorovMykhailo. This tweet, if no longer available via Twitter, or the above embed, can be found here on the Internet Archive.

 

At the time of this publication, it has been two weeks since the above set of tweets were pushed out to the world. As reported by the New York Times, and based on data from blockchain tracking firm Elliptic, since then, cryptocurrency investors have donated tens of millions worth of digital assets to the Ukrainian government and a nonprofit supporting the country’s military.

 

Sunday, February 27, 2022


We have just deployed 185 ETH to support the people of Ukraine. Here is the breakdown of where the funds are going, and our thought process behind the decision. ? — RELI3F (@reli3fxyz) February 28, 2022

This tweet, if no longer available via Twitter, or the above embed, can be found here on the Internet Archive.

 

CNET reported on March 5th, that:

Seeing all of these cryptocurrency fundraisers, 23-year-old NFT trader Andrew Wang on Feb. 24 tweeted out a thought to his 140,000 followers: What if an NFT collection was created to raise funds?” […] Wang sent the tweet out on the 24th on February, and a group chat filled with interested organizers was quickly formed. In the 24 hours that followed, 37 artists had agreed to contribute one piece each. The collection launched that night, consisting of 200 copies of 37 different NFTs, each of which sold for 0.05 ether, or $130. It immediately sold out, raising 371 ether, or $980,000, in 30 seconds. On Sunday night, in the hours before he spoke to me, Wang and the team went about distributing those funds. Reli3f sent three organizations 61 ether ($160,000) each: military support group Come Back Alive, local media vetted by the Kyiv Independent publication and medical assistance charity Hospitallers. […] After the funds were deployed, Reli3f created a Twitter thread [shown above] including links to the transactions, which could be vetted for legitimacy. The smart contract drawn up by the team was also up for scrutiny. Wang hopes the transparency that blockchains afford will be used to improve charity in the future.

RELI3F is a web3 initiative to provide global humanitarian aid. They state, “our first collection is in support of the people of Ukraine, and includes 37 of our space’s most influential artists, some of whom call Ukraine home. We recognize the Ukrainian people’s struggle. In a crisis where time is of the essence, web3 allows us to collaborate with artists + collectors to get funds where they are most needed. And because of the blockchain, we can provide full transparency. 100% of the primary sale will go towards relief efforts in Ukraine. All royalties from secondary sales will either go towards those same efforts, or towards supporting Ukrainian artists, charity, and/or art initiatives of the participating artist’s choice.”

 

Monday, February 28, 2022

TechCrunch reported:

At the time of writing, we can see on Etherscan that the Ethereum wallet received around 6,800 transactions. Similarly, there have been more than 7,000 transactions related to the bitcoin wallet address. People sent 153 BTC and 2,230 ETH, currently worth $6.29 million and $6.27 million, respectively. Some donators also sent Ethereum-based crypto assets, such as USDT and USDC. It’s worth noting that some members of the crypto community also started their own fundraising efforts. Michael Silberling put together a dashboard on Dune Analytics to track crypto donations to the @Ukraine-backed Ethereum wallet address, but also to other community-led projects. When it comes to outgoing transactions, large sums of ETH have already been transferred to Kuna, a cryptocurrency exchanged based in Kyiv. Kuna.io is providing technical support for the Ukrainian fundraise,” a Kuna spokesperson told me in an email. “All funds are safe and are being directed for the government need as requested.” Kuna founder Michael Chobanian has mostly been active on Telegram, but he recently created his own Twitter account to share details about the donations. (The Kuna team confirmed in an email that the account is a legitimate account.) Chobanian started sharing progress updates on the fundraising effort:

Crypto Fund of Ukraine 28.02 11:00 status Don’t stop! pic.twitter.com/Gzys9DmCCU — Michael Chobanian (@ChobanianMike) February 28, 2022

This tweet, if no longer available via Twitter, or the above embed, can be found here on the Internet Archive.

 

Tuesday, March 1, 2022


#cryptopunk #5364 is now owned by the government of the #Ukraine. pic.twitter.com/6SdIgl2zM2 — Django Bits (@djangobits) March 1, 2022

This tweet, if no longer available via Twitter, or the above embed, can be found here on the Internet Archive.

 

Cryptoslate reported on March 2nd, that:

Contributing to the growing donations, someone transferred a CryptoPunk to the Ethereum donation address of the Ukrainian government to show their support for Ukraine. A few hours later, it was determined that it was CryptoPunk #5364 is the one that was sent as a donation.

CryptoPunks, according to their creators, are:

10,000 unique collectible characters with proof of ownership stored on the Ethereum blockchain. The project that inspired the modern CryptoArt movement. Selected press and appearances include Mashable, CNBC, The Financial Times, Bloomberg, MarketWatch, The Paris Review, Salon, The Outline, BreakerMag, Christie’s of London, Art|Basel, The PBS NewsHour, The New York Times in 2018 and again in 2021. The Cryptopunks are one of the earliest examples of a “Non-Fungible Token” on Ethereum, and were inspiration for the ERC-721 standard that powers most digital art and collectibles.

Regarding the donation, Bloomberg reported on March 4th:

“Yes, someone donated us a CryptoPunk, but it’s so hard to sell, we haven’t used it at this point,” Bornyakov said. “We are going to keep it for now. We appreciate every support that people are trying to give. What’s important is people’s awareness. They see what’s going on, and they are trying to help. We are going to work with NFTs a little bit later, we are focused on things we can deal with right now. There’s no time to figure out how to convert them. Maybe once things settle down we’ll figure this out.” The ministry has no plans to sell its donated CryptoPunk #5364, showing a person in a blue bandanna smoking a cigarette, or others of the hundreds of donated NFTs any time soon. The CryptoPunk last sold a year ago for about 16.2 Ethers, worth over $43,000 in current prices. Prices of CryptoPunks have increased dramatically in the last year.
 

Wednesday, March 2, 2022

Forbes reported:

The Ukraine government and organizations supporting its fight against a Russia invasion have amassed more than $52 million in cryptocurrency donations—and already deployed at least $14 million—amid an influx of support as the country starts accepting a wider array of tokens and digital assets, including proceeds from the sale of one of the most expensive non-fungible tokens in history.  Wallet addresses linked to the Ukrainian government and nongovernmental organizations supporting its military have received nearly 60,000 donations since Russian President Vladimir Putin ordered an invasion of Ukraine early Thursday, including an all-time high of more than 10,000 on Wednesday morning, according to blockchain analytics firm Merkle Science. The donations include $6.5 million in proceeds from a Ukrainian flag NFT auctioned off Wednesday by the Ethereum-based group Ukraine DAO—marking the tenth most expensive NFT ever sold, according to Tom Robinson, chief scientist at blockchain analytics company Elliptic. […] On Twitter Wednesday morning, Ukraine’s Kuna Exchange founder Michael Chobanian, whose firm has been helping the country manage the cryptocurrency received, noted about $14 million worth of the donations had already been used, with a majority of spending happening exclusively in cryptocurrency transactions. In an interview with CoinDesk on Tuesday, Chobanian said funds have gone to Ukraine’s military and special forces to help purchase equipment, food and gas, but he stopped short of providing additional specifics “due to a level of secrecy involved.” He also said ether and bitcoin—which have represented about 69% of donations, per Merkle Science—were his “preferred” method for spending, given their ease of convertibility.
 

Decrypt reported:

The Ukrainian government made an “official request” to eight crypto exchanges to halt support for the Russian ruble, the Ukrainian government told Decrypt via email yesterday.  “Yesterday the Ministry of Digital Transformation of Ukraine made an official request to CoinbaseBinance, Huobi, KuCoin, Bybit, Gate.io, Whitebit, and Kuna asking to halt support for the Russian ruble, ruble spot pairs and fiat getaways, including Russian payment systems,” Yulia Parkhomenko, Head of the Department of Development and Financial Monitoring of the Virtual Assets Market, told Decrypt. […] On February 27, 2022—three days after Russia invaded Ukraine—Ukrainian Vice Prime Minister Fedorov tweeted his country’s first request to crypto exchanges to take action.  “I’m asking all major crypto exchanges to block addresses of Russian users,” his tweet read.  Coinbase, Kraken, and Binance have all publicly declined Fedorov’s request.  A spokesperson for Coinbase told Decrypt two days ago that “a unilateral and total ban would punish ordinary Russian citizens who are enduring historic currency destabilization as a result of their government’s aggression against a democratic neighbor.”  Kraken CEO, Jesse Powell, tweeted that “The People’s Money is an exit strategy for humans, a weapon for peace, not war.”

5/6 Sometimes the hardest thing about having power is knowing when not to use it. Our mission is better served by focusing on individual needs above those of any government or political faction. The People's Money is an exit strategy for humans, a weapon for peace, not for war. — Jesse Powell (@jespow) February 28, 2022

This tweet, if no longer available via Twitter, or the above embed, can be found here on the Internet Archive.

 

Thursday, March 3, 2022

MacKenzie Sigalos, for CNBC, reported:

Donations in cryptocurrencies like bitcoin and ethereum are pouring into Ukraine as the war with Russia enters its second week. Since Moscow invaded on Feb. 24, more than 102,000 cryptoasset donations, totaling $54.7 million, have gone to the Ukrainian government and Come Back Alive, an NGO providing support to the military, according to new data from blockchain analytics firm Elliptic. The raise includes a single donation of $5.8 million from Gavin Wood, the founder of a lesser-known cryptocurrency called polkadot. Donations have picked up this week, with around 72,000 of these donations coming in the past two days. Thus far, the contributions consist of $18.2 million in ether, $17.2 million in bitcoin and $9.5 million in a mix of U.S. dollar-pegged stablecoins, including an anonymous donation of $1 million in tether, a controversial token designed to be pegged to the U.S. dollar. […] Cryptocurrencies such as bitcoin have become more popular since they allow users to bypass financial institutions that might block payments to Ukraine. Elliptic says that the bitcoin, ethereum, tron, polkadot, dogecoin and solana addresses listed in the tweets have received over 96,000 cryptocurrency donations, with a total value of $46.7 million going directly to the government. “Cryptocurrency is particularly suited to international fundraising because it doesn’t respect national boundaries and it’s censorship-resistant — there is no central authority that can block transactions, for example in response to sanctions,” said Elliptic’s chief scientist, Tom Robinson.
 

Friday, March 4, 2022


The Crypto Fund of Ukraine raised $50M in crypto in a week to support #Ukraine ?? An incredible unity before Putin's encroachment on freedom and democracy. Aiming for $100M this week. We WILL win! ?? #StandWithUkraine — Mykhailo Fedorov (@FedorovMykhailo) March 4, 2022

Mykhailo Fedorov is Vice Prime Minister of Ukraine and Minister of Digital Transformation of Ukraine. He tweets at @FedorovMykhailo. This tweet, if no longer available via Twitter, or the above embed, can be found here on the Internet Archive

 

Vanity Fair reported:

ack in October 2008, an esoteric white paper published online under the pseudonym Satoshi Nakamoto offered an idea for a digital currency that had no leader and no power structure. To early adopters, the proposal was lauded as a way to help the disenfranchised get around the ruthless and highly profitable banking system. “What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.” Now, 13 years later, one has to wonder if Nakamoto intended the two willing parties to be Russian oligarchs who are supporting the destruction of a democratic country. […] No one wants to start World War III, and especially a nuclear war, with Putin, so NATO countries are largely hemmed into creating sanctions to try and inflict as much monetary pain as possible. So far, those sanctions have been quite successful, with the ruble’s value falling to less than a single U.S. cent and oligarchs facing the seizure of yachts, mansions, and other assets. But now it’s clear that the Russians are turning to the latest technology trend to find a way around these sanctions: crypto. And there is nothing that anyone can do to stop Putin or the oligarchs from using Bitcoin, Ethereum, or any of the blockchain-based currencies. “Neither dictators nor human rights activists will encounter any censor on the Bitcoin network,” Matthew Sigel, head of digital assets research at investment manager VanEck, told Bloomberg last week. On Wednesday, four Democratic senators wrote a letter to Treasury Secretary Janet Yellen asking how digital assets could be enforced in these sanctions too. “We are seeking information on the steps Treasury is taking to enforce sanctions compliance by the cryptocurrency industry,” the lawmakers wrote in the letter. For now, the crypto exchanges are taking a very limited approach to blocking users and activity. Binance, for example, agreed to target Russian clients who had been specifically sanctioned by the West, but the exchange said it would not freeze the accounts of everyday Russians, which many are asking for. Coinbase also said this week that it would “not institute a blanket ban on all Coinbase transactions involving Russian addresses,” but would block accounts and activity involving people who had been sanctioned.  On the Ukrainian side, government officials are using crypto to raise money for Ukrainian fighters and humanitarian efforts, and have, as of Thursday morning, managed to amass $54.7 million through more than 102,000 crypto donations since the beginning of the Russian invasion, according to the blockchain-tracking firm Elliptic. There’s also the UkraineDAO collective, which has raised over $4 million so far, and a long list of people in the crypto space who are trying to help the country and those displaced by the war. Other tech companies in and around Silicon Valley have been surprisingly swift in their efforts to help Ukraine and hurt Russia. Elon Musk sent a shipment of SpaceX’s Starlink satellite-internet dishes to Ukraine just 48 hours after a top official there asked for help restoring the internet after service had been disrupted. (When the head of Russia’s space program threatened to drop the International Space Station from orbit on top of America, Musk also said SpaceX would stop it.) On Tuesday, Apple said it would halt the sale of its products in Russia, a rare stand for the company considering that it made roughly $2.5 billion in Russia in 2020. And Netflix pushed back against a Russian law that requires services with more than 100,000 subscribers to carry Russian propaganda channels on their platforms. “Given the current situation, we have no plans to add these channels to our service,” a Netflix spokesperson said this week. […] But while the leaders of the tech companies are resolute in the side of history they want to be on, those in the crypto world are clearly struggling with this moral quandary over the role crypto is now playing to help the Russians. “The question is, is there any world or any scenario in which breaking the anonymity or decentralized nature of crypto is considered necessary, and if so, would this qualify? If Putin wanted to use crypto to get around certain sanctions, would even the most orthodox crypto maximalist be supportive of that?” a crypto trader and investor told me. “The answer speaks more to the fact that we are rapidly moving into a discourse of isolationism versus interventionism, more so than even left versus right. So let’s see if the new world of good versus evil, Russia versus Ukraine, has any patience for the libertarian utopia crypto bros have been selling us for the last decade.” He added: “All you have to do is go and look at the original white paper to see that this was in the cards from the beginning.”
 

Saturday, March 5, 2022

Lithuania-based crypto payment processor Coingate recently said it has begun an arrangement with the Ukrainian central bank that has seen the number of crypto assets well-wishers can donate to the country’s armed forces rise from just four to more than 70.
Ukraine has already spent $15 million of the donations it received in cryptocurrencies on military supplies, including bulletproof vests that were delivered Friday, according to Alex Bornyakov, deputy minister of Digital Transformation of Ukraine. The Ukrainian government anticipates doubling the $50 million of crypto donated so far in the next two or three days, Bornyakov said Friday in a Zoom interview from an undisclosed location inside Ukraine. Most of the donations have been in Bitcoin and Ether.The 250-person ministry has managed to find suppliers in Europe and the U.S. for everything from the vests to food packages to bandages and night-vision devices for army within two days after Russia invaded Ukraine on Feb. 24, Bornyakov said. About 40% of the suppliers are willing to take crypto. The rest are typically paid with crypto converted into euros and dollars, he said.
 

Sunday, March 6, 2022

Fortune reported:

The Kremlin won’t be able to use virtual money to evade sanctions from Western companies, Binance founder Changpeng Zhao said Friday, because “crypto is too small for Russia.” “Currently, the media and politicians are spending a lot of effort and focus on crypto and sanctions,” said Zaho, who heads up the cryptocurrency trading platform, as reported by The Guardian. But they should shift their energies elsewhere, given the dismally small share of global net worth that exists in crypto, he said. “If we look at the crypto adoption today, there is probably about 3% of the global population with some kind of crypto exposure (i.e., owning some crypto),” he said, according to The Guardian. “Of those, most only have a small percentage of their net worth in crypto. … There is probably only less than 0.3% of the global net worth in crypto today. ”This percentage applies equally to Russia.” Another obstacle to Russia using crypto as a work-around, according to Zhao: The use of publicly accessible blockchain renders it “not an effective tool for illicit activities,” he said, calling it “too traceable.” Meanwhile, ordinary Russians are using crypto “as a lifeline,” Coinbase Global Inc. Chief Executive Officer Brian Armstrong said this week. “Many of them likely oppose what their country is doing, and a ban would hurt them, too,” Armstrong said. […] The cryptocurrency industry has gotten significant attention amid Russia’s invasion of Ukraine, with some government officials wondering whether Russia or the country’s wealthy might be able to skirt sanctions by using crypto, and Ukraine actively seeking donations via digital assets. Mykhailo Fedorov, Ukraine’s deputy prime minister and minister for digital transformation, recently asked the major crypto exchanges to block addresses of Russian users. Recent blockchain data suggest residents in the sanction-hit nation have been in no hurry to trade crypto on major exchanges. Ruble-denominated crypto activity was just $34.1 million on March 3, according to Chainalysis. That’s down from a recent peak of $70.7 million on Feb 24—and the $158 million record on May 20, 2021.
 

Monday, March 7, 2022


Alex Bornyakov, the Deputy Ukrainian Minister of Digital Transformation, joins Yahoo Finance Live to discuss cryptocurrency donations made to Ukraine’s military and the role of crypto in evading sanctions amid Russia’s ongoing invasion of Ukraine.

 

Tuesday, March 8, 2022

Wired reported:

Crypto’s nature as borderless money, and the abundance of youngish, passionate people sitting on troves of crypto-millions made it a go-to method for Ukraine to raise funds from people outraged by Moscow’s actions. At the same time there were fears that government officials and Russian president Vladimir Putin’s moneyed inner circle might side-step western sanctions by moving their assets into crypto. Cryptocurrency exchanges are reportedly blocking all transactions from accounts known to be linked to sanctioned individuals. Crypto exchange Coinbase on Monday blocked over 25,000 Russia-linked addresses that it believes were linked to illicit activity to comply with sanctions against Russia. WIRED understands that Binance, the world’s biggest crypto exchange, has already identified and blocked at least one wallet linked to a sanctioned person, and has adopted a proactive approach, investigating and blocking accounts of people who are known to be close to individuals targeted by sanctions. Exchanges in most Western countries are required to carry out know-your-customer and anti-money-laundering checks, although some of them, including Binance, have been criticized for alleged laxity. Yet Tigran Gambaryan, Binance’s vice president of global intelligence and investigations, thinks the concerns that crypto will help to prop up Russia are overblown. “Crypto is not a very efficient way for a government and for a nation-state to elude sanctions,” he says. “There are other ways to move billions of dollars using the financial system that already exist, rather than use cryptocurrency.”
 

Wednesday, March 9, 2022

The Byte reported:

The Bored Ape Yacht Club (BAYC), the second-most valuable NFT collection out there right now, announced this week that it’s donated $1 million in Ethereum to Ukraine. “It’s been inspiring seeing our community come together in support of Ukraine — almost $1 million in ETH has been donated to Ukraine by wallets containing a BAYC ecosystem NFT,” the collective wrote in a Tuesday tweet. “Today we’re matching that with a $1 million ETH donation of our own.”
 

Thursday, March 10, 2022

It’s all fun and games until the ‘bad guys’ mention crypto Still, as Ruble denominated crypto sales popped off, many in the EU and US began to worry that crypto, for its strengths in border-less exchange, could be used to get around sanctions meant to punish those responsible for the invasion.  According to the Paris crypto researcher Kaiko, ruble-denominated bitcoin volume reached 1.5 billion RUB on Feb. 24, its highest level in nine months. Not only that, but the tether Ruble pair was twice as high as the bitcoin volume. Clara Medalie, a research director at Kaiko, told CNBC that stablecoins could play a more important role in circumventing sanctions than other, more volatile assets. She said governments could target these stable coin insurers to limit bad actor transactions. “Most dollar-pegged stablecoins such as Tether or USDC are issued by centralized companies that could be targeted by sanctions, which could force them to monitor transactions,” she said. “There is precedent to centralized stablecoin issuers’ blacklisting’ certain addresses, so it will be interesting to see how the role of stablecoins evolves throughout the crisis.” The crypto stable coin tether is incorporated in the Bahamas and claimed a backing of 1-1 USD to each tether for years while eluding any third party or governmental audit. However, in a self-performed audit last year, tether reported 97% of its treasury backing was actually in “commercial paper” or lent out to unknown parties.  The duality of crypto found citizens of Russia possibly leveraging bitcoin to escape monetary punishment. At the same time, Ukraine used the same blockchain network to raise funds to defend itself, independent of a banking system Russia may be able to damage. So which is it, good or bad, or the ugly in-between?
 

Friday, March 11, 2022

The Defiant reported:

What does [the war in Ukraine] mean for blockchain and cryptos? The crisis will create a domino effect across different industries and consolidate crypto as a potential tool for providing relief to Ukrainians, and average Russian families.  The demand for cryptocurrencies has been rising since the latest events, especially in the affected regions. The amount of bitcoin purchased in hryvnias and rubles is at a nine month high. Since February 24, the amount of bitcoin purchased with rubles at least tripled while the demand in Ukraine almost doubled. The surging bitcoin demand triggered a premium of 6% in both regions. WhiteBit in Russia’s case, whereas Binance and Kuna slashed the BTC-UAH trade pair with a 6% premium in Ukraine. 

Due to the sudden increase in the demand for cryptocurrencies, the price of the assets recovered, challenging the bear trend that has been detectable since November. Bitcoin recovered its support line above $38,000, while Ethereum surpassed $2,500. Nonetheless, a highly volatile period is widely expected, bringing an interesting challenge from the trading perspective. 

Furthermore, the devastating effects of the current commercial situation and the unstable financial environment can trigger consequences that go from people defaulting to larger bank runs and bailouts. This scenario will generate even more distrust into the centralized banking system, paving the way to adopting and recognizing digital assets and cryptocurrencies.  However, if Russia opts to go that way, it is not far-fetched that opposing countries might try to ban the cryptos used to circumvent the sanctions, especially if an agreement with China is met. While leading exchanges like Kraken and Binance refused to restrict Russians from using their platforms, companies like OpenSea and Consensys have begun cutting off blacklisted regions. It is also worth mentioning that Russia is no stranger to cryptos. The exact amount of cryptocurrency owned by Russians varies from source to source, going from $22B to $220B or 12% of the world’s crypto assets. Thus, they may be due to considering the digital approach. Besides, Russia is responsible for nearly 14% of BTC’s hash power necessary to mine blocks, the third-largest bitcoin mining hub in the world after the US and Kazakhstan.  Disrupted Economies The adoption of blockchain technologies appears to be imminent. Not long ago, in 2019, to be precise, two important JP Morgan Chase executives called bitcoin a fraud and an asset whose value would only thrive in a dystopian environment characterized by a loss of faith in all major reserve assets. Three years later, the stance from one of the U.S.’s leading banks has shifted 180°. JPMorgan is believed to have major stakes at ConsenSys, and also became the first financial institution to formally open a space in the metaverse by revealing the Onyx lounge inside Decentraland.  After two years of struggling with a COVID pandemic that disrupted economies, supply chains, and the lives of millions, the war for Ukraine is finding a more digitalized society battling one of the highest inflationary periods in recent years. The financial impact from Russia’s decision will be felt even years from now and can potentially change the traditional finance ecosystem. It is still early to tell the full effects of this conflict and how the world will react. For now, we all are focused on one single thing; the war ends soon with as few lives lost as possible.
 

That’s all we know … for now. Follow the Bchain Blog for more timely coverage on how governments, non-profits, companies, and individuals are using crypto and blockchain for social good.

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