Crypto Joins The War in Ukraine

the war broke out there's been a shift. Digital asset leaders in Ukraine are now hailed by some as heroes because of their work with the Ukrainian government to finance the war effort, and they're scoring some big successes along the way. Ukraine's Deputy Minister Phy Digital Transformation has said the crypto donations enabled the army to buy military equipment and medicine. Today I'm joined by Bloomberg Report Alistamosh to talk through his reporting on how Ukraine has been using

crypto during the war to support its armies and its population. Alistair, thank you so much for being our guest today, my Peta, thanks for having me. We're going to talk about the war in Ukraine from a crypto angle, which for folks who haven't been following along closely might seem like a little bit of a strange way to tackle this topic.

So I'd love for you to set the stage about what as it relates to Ukraine and crypto has been interesting but also been a sometimes controversial place for the industry, and how that has changed in light of the war with Russia. Well, so, the situation in Ukraine when it comes to crypto is in some in many ways not just similar to the experiences that you've had in many other countries in that the authorities have been suspicious to say the least of crypto, but what's been really amazing

to witness. I mean, obviously this is in some ways a smaller story of the broad struggle that Ukraine has been through in the credible journey that the Ukrainian people

have been on these last months. But one one sort of small chapter of that is how the attitudes towards crypto have changed fundamentally, because a couple of years ago, actually Ukrainian authorities viewed crypto with deep skepticism and there were frequent raids of crypto exchanges and anyone involved in crypto activity from both the Special services and other government bodies.

It was viewed as you know, sort of the classic idea of this is just drug money on this is money for illicit purposes and there's no good use for this technology or this that type of asset. But actually the war experiences totally transformed there. It's been kind of miraculous to see that actually the war effort is being financed in part by crypto, and Crypto is playing a critical role in enabling the government to source military equipment,

humanitarian aid, all kinds of necessities that it needs. Despite the relentless onslaught of Russian forces, Ukraine's vital tech sector is still operating for clients around the world, while Ukraine's own tech leaders are helping support the war effort and working around the clock to keep their own employees safe.

Right now, so you're holding up your phone. I mean, one of the things that really struck me when we were doing reporting on the situation with Crypto and Ukraine after the Russian invasion was how many developers protocols, you know, the kinds of bits of crypto infrastructure that people have come to rely on. Our manteein either out of the Ukraine or by Ukrainian devs, and you know, given that environment, were you more or less surprised that crypto has an

emerged as this lifeline during the war. You're definitely right that there was a very vibrant local crypto scene in that there were many developers locally. They are articals based people working on various projects in Ukraine. And actually Michael Chabani in who's ahead of the Kuna crypto has changed that the biggest exchange in Ukrainian I'm sure we'll we'll

be talking about in a moment. He called the crypto scene wild back in the day, and there was both wild, one because you had the sort of the government suspicion and crackdown of which I've spoken but also because you kind of had a real vibrant local scene where you had many people working on different projects and there was a real buzz about it. He talked about meetups where there would be hundreds of people, you know, into the thousands, gathering on a weekly basis. That's very different to any

experience that I've had in London. So there was this sort of acceptance of crypto, both in terms of having plenty of Ukrainians working in the industry, but also there are statistics showing that Ukraine is either the first or suddenly in the top three in terms of countries globally that use crypto. So those kind of this underlying um acceptance among the people. It was just sort of at the government that although there was a suspicion, and now

that's totally transformed. So I guess it's sort of an aligning of government and state with the people. And you mentioned Michael Servanion, who has really been instrumental in making that alignment happen, right, So he he is sort of apocryphally known as the father of the crypto scene in Ukraine. You interviewed him at the very beginning of the war by voice memo back and forth to hear more about

the developments at the time. And one of the big things that was happening, you know, in the in the days immediately following Russia's invasion of the country was the crypto community rallied around philanthropy in a way that was I don't want to say unprecedented, but at least remarkable in that they were donating millions and millions and bions of dollars worth of crypto to the Ukrainian government, and what was really unusual was that they were doing that

to the Ukrainian government's or wallets. What was Trabanion's rule in making this happen? Right, But he is actually a really fascinating character. I mean he when I said that I'd heard he was the godfather of crypto E in Ukraine, he laughed and said, yes, that's what they called me.

I was the first guy who actually started publicly speaking about the crypto, the first guy who actually did you know, to be honest, there's a lot of stuff that I did first, like the first at M, first, public trade, first company, forced exchange, first, OTC first, you know, a

lot of first. So we spoke early March, so that the war had been getting up just over two weeks at that point, and this was the point when it was clear that the Ukrainian government was asking or essentially forcing or all military age men eighteen plus men to stay in the country and fight. So I assumed when I spoke to him that he would be somewhere in the trenches or you know, we're doing some kind of army job. No, I didn't join the army because I felt really a good army man. I'm good with guns,

but only a theory. So my job is being a crypto banker for the government. So I'm in charge of collecting fundraising, um storing crypto, exchanging crypto to crypto, exchanging crypto to FEAT, opening the bank accounts, or for intermediacy or for the government, so we can change crypto to FIAT and then wire them to our accounts, and without those accounts we can buy some wherever. It's required by the Ministry of the Bands. And there's some statistics that

they keep. The numbers keep changing, but the government puts them out on Twitter from time to time, the decraining government, and they say that's something like I think it's five thou it's covery more than that now, um bullet proved best.

And then there are pictures of them having There are pictures as the Deputy Minister of Digital Transformation, which is a wonderful title, and he puts on his Twitter feed if you ever inclined to look, pictures of armored vehicles and weapons and bullet proved best and all kinds of things that have been bought with crypto. So it's quite quite remarkable. Really, We'll be right back to talk about the innovative ways crypto is helping the war effort in Ukraine, Kuna.

You know, to that point about Germanian being the crypto bancor, he has been. I remember one of the stats in March was that of the hundred million dollars or so that the government had raised at that point, and it's way more than that at this point. You know, he was managing like sixt of that money on their but to buy that military equipment and other supplies that you're describing. So it seemed like it's a pretty important and probably very complicated rule right now for sure, and also in

some ways a little bit um. You know, it probably goes against the grain a bit of his own background. You know, to be working for the state is kind of a funny thing for a crypto guy to do, but it's so, I guess, all part of this sort of patriotic national effort to be the Russians into supplying what the people need to Yeah, I'm not sure he would have ever imagined that he would be working for

the government, but that's that's where he finds himself. And you're right, it is quite an important, quite an important role. The battle for dome Bus remains Russia's strategic focus and territorial gains have been slow in the face of stiff

Ukrainian resistance. Well, I'm glad you raised that point about the tension between you know, the the anti government libertarian roots of a lot of crypto and a lot of people in the scene, and the fact that so many people rallied to give money not just to a government,

but to a military. And you know, it's certainly been an interesting and challenging time for I suppose you could call them the crypto purists who have been for years saying the point of this, of this, these tokens, the point of this ecosystem is to avoid government interference of any kind. Um And to have you know, a bunch of folks who were very influential in the industry. You had the heads of exchanges, you had the inventor of ethereum all saying hey, this is a good cause and

we should rally around. That was was really quite remarkable. Indeed, I think it exposes a lot of kind of the tensions and contradictions within crypto. I mean, here's a kind of approve of concept that bitcoin and kind of crypto in the border sense has a social utility. Crypto is providing almost like a humanitarian service here while in subways

it's not surprising, but you're right it does. It does kind of go against the grain of the ethos yea, the kind of anti libertarian stuff indeed, and to the point about the G in in in e s G. You know, the the idea of corporate government governance. It's certainly raised a lot of interesting issues around sanctions and sanctions of visions because one of the things that Ukraine was also calling for was for exchanges to ban not just people who are in the Russian sanctions list, but

any Russian citizens at all. And even the exchanges that have been very supportive of Ukraine's crypto efforts came out and said, no, we're not going to do that. If somebody is on a sanctions list, we will absolutely comply with that sanctions list. We will make sure that we're not allowing them to use our services in any way, but we're not going to ban everyone with a Russian

passport from using these services. Yeah, you're right, it is really interesting, like be and also what should be the response to to the state, um, what should be the response to regulators and so on? That is still an open question. By the stories about Bonance, for example, you know, just shows you that we're in a world of greater regulatory and government interests and oversight of the crypto markets. So I guess you've got to be careful, how you well,

crypto businesses have to be more and more careful. Absolutely matred here. Yeah, and Binances in the news because of a blockbuster router's report that they had been responsible for helping to launder a couple of billion dollars worth of crypto that was associated with a North Korean hacking group known as Lazarus, which they have of course scrupulously denied. Um, but certainly something that is going to get to your to your point, even more governmental scrutiny and quite likely

regulation in the coming weeks and months. Exactly, yeah, exactly. Was this whole idea about how going back to my point of about crypto being sort of providing a social good here is that crypto I think the Ukrainians situation that the war has proved that bitcoin and crypto can provide great utility, great social benefit, but also can be used for the finance terrible things too, So that the sort of the argument about it's all just drug money

and terrorist financing. Well maybe, but there's also this side too. This is a very in my mind, you're burning in Ukraine. It's a very positive story for crypto and bitcoin, that it is helping people and desperate needs to fight against an oppressor. And you know that's a wonderful story to tell. Well, that is a very positive notes on which to end, So thank you very much for joining us. Thank you.

You can find more of his reporting on the Bloomberg Terminal on Bloomberg dot com and find him on Twitter at Alistair g Marsh on the next episode of Bloomberg Crypto. California's Silicon Valley is both a place and a philosophy, often hailed as the place for US tech startups to get their start. Vcs, or venture capitalists, are an integral part of this mythology. These are the people who provide the private capital billions of dollars worth, so these startups

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