The fight to cut off the crypto funding Russia’s invasion of Ukraine

The Western world has taken drastic measures to cut the economic ties that fuel Russia's invasion and occupation. Millions of dollars have continued to flow directly to Russian military and paramilitary groups in a form that is harder to control despite the global sanctions.

At least $4 million worth of cryptocurrencies has been collected by groups supporting Russia's military in Ukraine since the beginning of the year, according to researchers. Some of the recipients include paramilitary groups, military contractors, and weapons manufacturers. The flow of funds, often to officially sanctioned groups, shows no sign of abating and may even be speeding up. Despite the ability to trace those funds, freezing or blocking them has proved difficult due to the fact that most of them are based in Russia.

“Our aim is to identify all the crypto wallets being used by Russian military groups and the people helping them; to find, seize and block all this activity that is helping to buy the bullets, the ammunition of this occupation,” says Serhii Kropyva, who until recently served as deputy of Ukraine’s Cyber Police and advisor to the country’s prosecutor general. “With the close cooperation of companies like Chainalysis and Binance, we can see all the wallets involved in this criminal activity, these money flows of millions of dollars. But we can, unfortunately, see that the transfer is continuing all the time.” Advertisement

Donations to the Russian war effort that began with public posts on the messaging app Telegram were tracked by the cryptocurrencies tracing firms and the investigations team. According to Chainalysis, posts on Telegram from organizations including the pro-Russian media sites Rybar and Southfront, as well as the paramilitary group Rusich, all posted addresses to Telegram for donations. Money raised there would be used for everything from weaponized drones to radios. According to Chainalysis, a group called ProjectTerricon tried to auction NFTs to support pro-Russian militia groups in Eastern Ukraine, but they were removed from the marketplace before any bids were placed.

A total of $4.2 million was funneled to Russian military groups over the course of a few months. The groups named in its research didn't completely overlap with those named in Chainalysis' report, suggesting that the overall funding could be much higher. MOO Veche is a pro-Russian group that has raised money for military equipment similar to what Chainalysis flagged. Elliptic traced over one million dollars in donations to MOO Veche, far more than the other researchers.