How Ukraine is spending crypto donations

Ukraine’s official Twitter account has been sharing cryptocurrency wallet addresses for the past few days to raise funds during the Russian invasion of Ukraine. As I previously reported, it seems likely that the Ukrainian government is in control of the funds received on these wallet addresses as a spokesperson for Ukraine’s Ministry of Digital Transformation confirmed that “these accounts are state-owned.”

But what are the goals with these crypto donations and what’s going to be purchased with those funds? Because of the nature of blockchains, it’s easy to follow the crypto transactions, up to a certain point. You can enter the public addresses into a blockchain explorer to see the list of incoming and outgoing transactions.

For instance, on the Ethereum blockchain, most outgoing transactions go to Kuna, a cryptocurrency exchanged based in Kyiv.

“Kuna.io is providing technical support for the Ukrainian fundraise,” a Kuna spokesperson told me in an email on Monday. “All funds are safe and are being directed for the government need as requested.”

But once funds are uploaded to an exchange, they become harder to trace. That’s why I’ve asked several questions to Kuna founder Michael Chobanian. He told me more about Kuna’s role in the crypto donation setup and the Ukrainian government’s motivations.

Chobanian confirmed that he recently created a Twitter account to share information about the donations. “That’s right, it’s my account — recently created. Twitter is not really popular in this part of the world because it’s mainly an English community. I created it because we have to talk to the world,” he said.

Today at 12 PM, Kyiv time, Chobanian shared two screenshots. More than $31 million have been raised for the ‘crypto fund of Ukraine’ (that’s the wallet addresses shared by @Ukraine on Twitter) and around $17 million have been raised in a different fund.

“We have two funds. First, we launched our own fund and then the government saw that it’s been working well. We’ve been approached by the Ministry of Digital Transformation to help them create a government fund. So we created a government fund as well,” Chobanian said.

The addresses of each fund are shared through different channels. “Right now we have two funds. The one on Twitter is the government fund and the one on Telegram and other social media is a Kuna fund,” he added.

Funding Ukraine’s military budget

What Michael Chobanian calls ‘the government fund’ is still managed by Kuna. But he says that Kuna acts on behalf of the government and doesn’t have a say about the crypto assets.

“We are the technical provider. Basically, we are acting as the crypto bank for these funds. We collect, we make sure that the money is clean. Then, depending on the requirements for payments and currencies, we either convert or pay directly,” Chobanian said.

“The purpose of this fund is for the military. It’s operated pretty much by the military with the help of the Ministry of Transformation. There, the money is spent on special goods that are being imported. They go directly to the army or special forces. What exactly are they buying? I can’t tell you for obvious reasons. I’m not sure whether the government will actually disclose what we bought because it’s obviously a secret,” Chobanian said.

As for Kuna’s other fund that is shared on Telegram and other social networks, the purpose is a bit different. “For my fund, we are buying drones, we are buying petrol, we are feeding people, we are paying for transportation to evacuate people from the most dangerous places like Kyiv and Kharkiv,” Chobanian said. “We also supply the regular army and […] regular people who come out and get guns from the government,” he added.

Buying supplies in crypto

Interestingly, cryptocurrencies aren’t just used to raise money through the internet. Kuna doesn’t convert all these crypto assets to fiat currencies.

“We keep it in crypto until we understand where we’re paying, how much we’re paying and whether people are happy to receive crypto. 90% of payments are done in crypto only,” Chobanian said.

But if someone needs to be paid in fiat currencies, Kuna can convert crypto assets and send money to bank accounts. “We are paying in crypto, we are paying in euros, in dollars — all kinds of transactions that are required in order to facilitate the needs of the funds,” Chobanian said.