Contribution: Marek Kołtun, Dariusz Kołtun, 9 September 2023.
Each of us met with the functioning of virtual currencies and fresh technologies in individual and professional life. For some, this is an chance to invest with the expected profit, and for others it is simply a negative phenomenon, either due to the fact that they were deceived or their investments remained on a negative balance. However, before starting to invest in digital currency, it is crucial to look at their foundations and their scope of operation or risks, which the Financial Supervision Commission warns about in its communications.
The Russian Federation's invasion of Ukraine from 22 February 2022 changed the importance of rules related to the rotation of bitconets. According to information published by the website Economist Intelligence Unit (https://www.eiu.com/n/), the event accelerated the legalization and process of introducing virtual currencies into the Ukrainian financial system. On 17 March 2022 Ukraine officially legalized the previously unregulated strategy of functioning of digital coins, as well as the anticipation of providing online financial platforms intermediation services in the exchange of these units. Through the social networking portal Twitter (now X) Minister of Digital Transformation of Ukraine Mykhailo Fedorov @FedorovMykhailo and @Ukraine on 26 February 2022 reported on the creation of virtual cryptographic portfolios: Bitcoin, Ethereum and Tether, and encouraged any donations to the Ukrainian administration based on fresh technologies. At the same time, the Ukrainian public benefit organization Come Back Alive posted the same information, encouraging the promotion of war activities through the payment of free donations. Below is simply a photocopy of the entry of the Minister of Digital Transformation of Ukraine on the social portal.
Screenshot 1. Mykhailo Fedorov's Twitter entry.
Source: https://twitter.com/FedorovMykhailo/status/1497549813205848068, 17.10.2023.
It should be noted that these types of virtual coins have a advanced commission, but this does not discourage the making of contributions whose main intent is to support the equipment of the Ukrainian army.
The administration of Ukraine increased its work on implementing cryptocurrency, and according to the global survey squad Chainalysis in 2022 the country ranked 4th in the category of cryptocurrency legalization. The adaptation of legal acts that strengthened the virtual currency marketplace for donations forced the current armed conflict with the Russian Federation on the Zelenski administration. The ultimate Council of Ukraine (parliament) on 17 February 2023 approved the regulation of the area and legalization of the exchange of virtual coins after the changes proposed by the National Bank of Ukraine, the National Securities and Exchange Commission of Ukraine and president Volodymyr Zelenski.
On the another hand, the second analytical platform – Elliptic – in a published study reports that as of 29 March 2023 the full value of donations collected was USD 100 million, and around USD 72 million were direct donations recorded on authoritative Ukrainian virtual wallets. The main donors were natural persons. Over time, the Ministry of Digital Transformation expanded the anticipation of making donations of more than 70 different digital coins.
It is noteworthy that the Ukrainian administration in March 2022 opened the Museum of War in the form of NFT digital tokens, which depict the chronologically ordered atrocities of the Russian Federation in the territory of Ukraine, as reported by Mikhail Fedrow on Twitter. The usage of fresh blockchain technologies demonstrates an innovative idea, as well as a evidence of past and memory of an invasion of their country. The authors of the NFT tokens are computer designers from Ukraine and another countries of the globe. Their work can be purchased at online auctions, and the transferred assets will be utilized to equip the Ukrainian army and another civilian persons residing in the conflict area.
The attached photocopies present the balance together with an analysis of the assets flows on another virtual cryptographic portfolio called Ukraine Crypto Donation in the Ethreum registry created by the Ukrainian administration.
Screenshot 2. Balance and Asset Flow Analysis on Ukraine Crypto Donation Crypto portfolio in Ethreum Register.
Source: own improvement based on etherscan.io, 17.10.2023.
At the same time, the Russian administration besides analyses the usage of fresh digital technologies to rise donations to military equipment and equipment, organised by entities active in the conflict, including cyber criminals or groups raising funds in social media, mercenaries groups, sanctioned entities and disinformation campaigns.
An example may be published by Elliptic, the leader of blockchain analysis on compliance with financial crime laws, information from pro-Russian organizations obtained through white intelligence, which depict generated virtual wallets of bitcoin, ethereum, stablecoin and monero.
Payments to these virtual wallets will let to finance Russian military equipment, including unmanned Perseus-1 drones, as well as military medical equipment and another specialized equipment utilized during wartime activities.
It should be noted that virtual currencies have become a strategical origin of backing for war activities. The main advantage of the operation of the bitconet is the velocity of the transaction, as well as the request to broker banks. This fact was confirmed in social media by deputy minister of transformation of the Ukrainian digital administration Oleksander Borniakow. The cryptovaluts are increasingly curious in the Russian Federation and Ukraine. Values gain fresh virtual currencies that were little popular until before the conflict began. inactive cryptocurrency monero remains a leader in maintaining the anonymity of payments made based on a distributed blockchain registry.
