The Expansive Role of Cryptocurrency in the Ukrainian War


This war is being digitally documented in a way we have not seen before. And it is not just Twitter and images and posts on the internet. There is constant concern about electronic information interference from all sides, from fake news to information censorship, to actual destruction of communication infrastructure. For the first time cryptocurrencies are also playing a big role in the war and are being used by Russian oligarchs, potentially Putin himself, trying to find a way around the economic sanctions, as well as to help fund Ukraine and refugees in the midst of a humanitarian crisis.

  • Bitcoin and Tether trading using both the Russian ruble and the Ukrainian hryvnia surged to recent record highs.
  • It is estimated that Russia ranks 18th in world crypto adoption and is home to at least $214B worth of crypto, or 12% of the industry’s total value.
  • Russia ranks 3rd of all countries at bitcoin mining (process of minting new crypto units), just behind Kazakhstan, which is firmly in Moscow’s orbit.

NATO countries, wanting to avoid World War III, are trying to inflict as much economic pain as possible with sanctions on Russia. The ruble’s value has been sent into a free fall to values last week under 1 cent US, limitations have been put on the amount of dollars that Russians can withdraw, and oligarch assets are being seized. Even in countries that have not officially banning import of Russian oil, impacts are being felt as insurers will not insure tankers or ports will not let tankers with Russian oil land.

Russia likely foresaw some of this and did some advance maneuvering in cryptocurrency to lessen the sting of sanctions, which likely cannot be stopped. The Treasury Department is looking into how digital assets could be captured in these sanctions, but crypto exchange responses will likely be uneven. The industry seems united against the idea of a blanket ban, but some crypto exchanges are taking limited approaches by blocking transactions from accounts known to be linked to individuals specifically sanctioned by the West, but not freezing accounts of all Russians.

  • On 3/7 it was reported that Coinbase blocked over 25,000 Russia linked transactions in an effort to try to enforce Russian sanctions.
  • Binance, the world’s largest crypto exchange, has blocked at least one wallet linked to a sanctioned person, and is taking a proactive approach to investigating and blocking others.
  • Exchanges in most Western countries are required to carry out know-your-customer and anti-money-laundering checks, but many of them are felt to be lax.

Moving large sums of money in crypto covertly has its limitations and may not be as big a way to skirt sanctions as some fear. Some illicit trades are likely still going to happen under the radar, including digital wallets controlled by proxies of those on the sanction list.

On the Ukrainian side, government officials are using crypto to raise money for both fighters and humanitarian efforts, and report to have raised $54M through more than 102k crypto donations as of last Thursday, including contributions from certain crypto bigwigs. Bloomberg reported March 4 that $15M of this has already been spent on military supplies, including bullet proof vests and military supplies.

Reverse Payback?

Putin may at some point demand Russian based exchanges to block all transactions from accounts that are linked to Western governments, or those that have are supporting Ukraine.

Guilt by Association?

China is still trying to play both sides by not coming down clearly on one side of the conflict or the other. They do not want to appear to be condemning Putin’s war, but also not wanting to risk its reputation and trading partners by continuing to align with Russia. Until China denounces the war the rest of the world assumes they are in Putin’s camp, with looming threats of sanctions and changes in trading status by the US and NATO allies.

Cyber Wars – Dark Hats vs. White Hats

Tech companies have responded quickly in ways designed to help Ukraine and hurt Russia. For example, Elon Musk sent a shipment of satellite dishes to Ukraine within 48 hours after being asked to help restore internet service that Russia had disrupted. Apple said it would halt product sales in Russia, after reporting about $2.5B in sales there in 2020. Netflix is limiting service. McDonalds closed 850 of its stores in Russia but is continuing to pay its’ 62,000 employees and is doing the same in Ukraine. Companies like Starbucks, PepsiCo, Coca-Cola, General Electric, Burger King, Yum Brands (parent company of KFC and Pizza Hut) are each taking proactive steps to do things like suspending service in Russia and donating profits to aid Ukraine. McDonalds will likely be hardest hit as the company owns more than 80% of its stores vs. them being held by franchisees. Regardless, Americans have spoken, and are continuing to do so.

Volodymyr Zelenskyy is using Twitter and Instagram with mastery, delivering motivational speeches from his phone daily and staying in contact and in front of world leaders in an altogether new way, including speaking before Canadian and US governmental bodies in the last two days. Ukrainians are sharing both how their citizens are banding together to fight and support each other as well as evidence of Russia’s attacks.

Russia is inflicting as much pain as possible by hacking Ukraine’s banking system, government websites, and defense systems. Online vigilantes like Anonymous are hitting Russia right back, reportedly:

  • breaching more than 1,500 websites
  • shutting down the Russian space agency’s spy satellite imaging
  • taking down electric car charging stations in Russia and changing their displays to a message personally offending to Putin
  • a Russian protestor, Marina Ovsyannikova, an employee of the state-owned Channel One network in Moscow interrupted a prime-time Russian newscast with a sign stating not to believe the propaganda about the war and that the people were being lied to


Leaders of tech companies seem resolved in what side of this they want to be seen on, but those in crypto seem to have more of a moral quandary over breaking the anonymity and decentralized nature of crypto. The conversation may in part boil down to isolationism vs. interventionism, democracy, or autocracy, good or evil. But in the last two weeks the global and Russian internet have already been transformed into two realms, with crypto one of the few things that still reaches both.