As Russian troops have poured into Ukraine’s borders over the past eight months — and with an ongoing mobilization of hundreds of thousands more on the way — the Western world has taken drastic measures to sever the economic ties that fuel the Russian invasion and occupation. But even as those global sanctions have carefully removed Russia from global trade, millions of dollars have continued to flow directly to Russian military and paramilitary groups in a form that is harder to control: cryptocurrency.
Since Russia launched its full-scale invasion of Ukraine in February, at least $4 million worth of cryptocurrency has been amassed by groups supporting the Russian military in Ukraine, researchers have found. According to analyzes from cryptocurrency tracing firms Chainalysis, Elliptic and TRM Labs, as well as researchers at Binance, the world’s largest cryptocurrency exchange, recipients include paramilitary groups that provide ammunition and equipment, military contractors and weapons manufacturers. That flow of money, often to officially sanctioned groups, shows no signs of slowing down and may even accelerate: Chainalysis traced about $1.8 million in funding to the Russian military groups in the past two months, almost equaling the $2.2 million it received. it found the groups received in the previous five months. And despite the ability to track those funds, it has proven difficult to freeze or block them, largely due to unregulated or sanctioned cryptocurrency exchanges — most of them based in Russia — disbursing millions in donations earmarked for intruders.
“Our goal is to identify all crypto wallets used by Russian military groups and the people who help them; to find, seize and block all these activities that help to buy the bullets, the ammunition of this occupation,” said Serhii Kropyva, who until recently served as a deputy to the Ukrainian Cyber Police and adviser to the Attorney General of the country. “With the close collaboration of companies like Chainalysis and Binance, we can see all the wallets involved in this criminal activity, these multimillion-dollar cash flows. But unfortunately we can see that the transfer continues all the time.”
In separate reports, Binance’s cryptocurrency tracing companies and research team each tracked donations to the Russian war effort that very often started with public posts on the messaging app Telegram asking for crowdfunded donations. For example, Chainalysis found Telegram posts from organizations including the pro-Russian media sites Rybar and Southfront, as well as the paramilitary group Rusich — associated with the infamous Wagner mercenary group — all posting cryptocurrency donation addresses on Telegram. These posts told followers that the money raised there would be used for everything from weaponized drones to radios, rifle accessories and body armor. In another case, Chainalysis points to a fundraiser by a group called Project Terricon that attempted to auction NFTs to support pro-Russian militia groups in eastern Ukraine, though the NFTs were removed from the market they were hosted on before bids were placed.
Binance’s investigative team found in its own report that a total of $4.2 million worth of crypto had been funneled to Russian military groups since February. The groups mentioned in the study did not quite overlap with those mentioned in Chainalysis’s report, suggesting that the total funding could be much larger than Binance’s or Chainalysis’s total. For example, Binance points to a pro-Russian “cultural heritage” group known as MOO Veche that has conducted fund-raising campaigns for military equipment similar to the ones funded by the groups Chainalysis flagged. While Binance, TRM Labs, and Elliptic all cite MOO Veche as a major fundraiser, Elliptic tracked $1.7 million in crypto donations to the group, far more than the other researchers.
Telegram via Andy Greenberg
