MarketWhat role has crypto played for Ukraine?

What role has crypto played for Ukraine?

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There are allegations against Ukraine following the FTX bankruptcy: related to donation deals with cryptocurrencies and US elections. This has not been proven. What role does crypto play in the war?


The bankruptcy of crypto exchange FTX and the fall of its once-glamorous founder, Sam Bankman-Fried, have been making the headlines for days. The effects of the FTX bankruptcy now extend far beyond the financial world, to the Ukraine war.

Because the Ukrainian state has faced many unfounded allegations after the bankruptcy. These range from alleged money laundering on behalf of US Democrats to unjustified speculation with donations. What role do cryptocurrencies play in the Ukraine war?

“This was an extraordinary step. No government has called for the donation of cryptocurrencies like this before,” economist Philipp Sandner of the Frankfurt School of Finance and Management told ZDFheute. Cryptocurrencies can be used to provide targeted assistance quickly and without intermediaries such as banks.

In emergencies, when infrastructure collapses, crypto can step in in a decentralized way. Charities often need weeks and only a fraction of the funds come in. This could be a completely new method of fundraising.

Philipp Sandner, Frankfurt School of Finance and Management

In the weeks that followed, millions of cryptocurrencies were delivered to the addresses of the Ukrainian government. But after a short time, paid crypto donations decreased significantly.

Almost no major donations have been made for Ethereum, the second most important currency, since mid-April. His donation wallet had been virtually untouched for months and had an account balance of several hundred thousand dollars almost unchanged. This did not surprise crypto expert Sandner.

It was a campaign that garnered a lot of money in a short time. Meanwhile, state donors took over Ukrainian aid.

Philipp Sandner, Frankfurt School of Finance and Management

What is its connection with FTX?

In order to process donations, Ukraine has also collaborated with several crypto companies, including FTX, the second largest crypto exchange in the world. The US right-wing media and activists suspected a conspiracy, as FTX founder Bankman-Fried was a major donor of the US Democratic election campaign.

For example, high-reach channels claimed, without providing verifiable evidence, that billions of dollars in US government aid to Ukraine was the result of FTX lobbying efforts. They also accused the Ukrainian authorities of wanting to fill the state coffers or their own accounts by speculating on the volatile crypto market. German alternative media also covered these points.

There is absolutely no evidence of speculation regarding these crypto donations. But of course this affects a real problem: There’s no guarantee how donations will actually be used.

Philipp Sandner, Frankfurt School of Finance and Management

Ukraine denies these allegations. Ukrainian crypto platform Everstake, which was involved in the transactions, emphasizes that FTX only helped divert the cryptocurrency to the Central Bank of Ukraine in the first phase of its fundraising campaign in March. The FTX bankruptcy has not yet been fully processed, but so far there is no indication that the allegations may be true.

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What did Ukraine buy with crypto donations?

On August 17, Ukraine’s Digitization Minister Mykhailo Fedorov posted on Twitter what the donated cryptocurrencies are used for. Of the $60 million raised through the “Help Ukraine” project, about $54.6 million was spent at that time.

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Source: ZDF

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