Ukraine, which has waged a staunch defense against Russian invasion, says it has pioneered a new source of financial support: People around the world who have donated millions of dollars directly to its war effort via cryptocurrencies such as bitcoin. Since Feb. 26, when Ukrainian officials began tweeting calls for cryptocurrency donations, the Ukrainian government says it has taken in almost $67 million of its $200 million goal as of Saturday. “Today, crypto is playing a significant role in Ukraine’s defense,” Alex Bornyakov, the country’s deputy minister for digital transformation, wrote on the nation’s donation website. Ukraine has spent about $34 million of the funds received as of last week, converting about 80% to traditional currencies and using the remainder with merchants that already accept cryptocurrencies, Bornyakov said in response to emailed questions. The funds raised in cryptocurrency are a just small part of the overall donations that Ukraine has received. After raising as much as $12 million on March 2, cryptocurrency donations have tapered off although boosters say the unexpected initial surge may inspire other efforts to solicit cryptocurrencies for humanitarian or defensive purposes. Officials have said that the speed with which they can use cryptocurrency donations has made them useful. The downside of that ease of transfer, of course, is that cryptocurrencies continue to be a magnet for scams and are the currency of choice for criminal networks. On Tuesday, European Central Bank head Christine Lagarde warned that crypto assets “are being used as a way to try to circumvent the sanctions ” against Russia, but didn’t provide details beyond noting that global transfers of rubles into cryptocurrency are rising sharply in volume. Michael Chobanian, the founder of a Ukrainian cryptocurrency exchange, is one of several people helping the Ukrainian government manage the donations through an informal agreement, Bornyakov confirmed. “We are buying so much stuff that is saving lives every single day and also are stopping the aggression, so it’s a beginning of the new world,” Chobanian said in a voice message sent via the app Telegram. Chobanian said he was not receiving payment for his work but acknowledged that some of the funds are being converted through his cryptocurrency exchange Kuna. “It’s certainly a first,” said Bennett Tomlin, who investigates cryptocurrency scams and hosts the podcast Crypto Critic’s Corner. “We’ve never seen a sovereign nation fund their defense efforts in crypto before. It does prove out a lot of the crypto argument.” That argument is that cryptocurrencies allow for the unfettered sending and receiving of value across borders via networks that can’t easily be censored or shut down because there is no single entity in charge. Proponents also argue that cryptocurrency doesn’t require users to trust financial institutions because the system is managed by code that anyone can inspect and transactions are written indelibly into distributed public digital ledgers known as blockchains. The donations to Ukraine are a stress test of sorts for those claims, some of which have fared better than others. For example, services like cryptocurrency exchanges do act as gatekeepers in part because many are required to collect identifying information about the people who use their services. Two large cryptocurrency exchanges, Binance and CoinBase, took action to limit use of some of their services in Russia earlier this month, although they have not […]

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