Ukraine Bought Weapons, Drones With Crypto Donations

Ukraine’s government bought weapons, unmanned aerial vehicles (UAVs, better known as drones) and digital rifle scopes, besides non-lethal tools, with some of the $60 million in crypto donated after Russia invaded the European nation earlier this year, an official revealed in a new breakdown of expenditures.

Mykhailo Fedorov, Ukraine’s minister for Digital Transformation, tweeted the breakdown on Wednesday, which revealed the government had used some of the $54 million worth of funds raised via crypto to purchase lethal weapons and launch an English news platform. Another $6 million has yet to be spent.

Ukraine’s donation website acknowledges the drone and lethal weapon purchases, although the displayed figures differ from Fedorov’s calculation.

"We (the Digital Ministry) converted crypto and sen[t] it to our Defence Ministry. They decided that they need something (lethal weapons). We are at war and we can defend ourselves with every mean possible,” Deputy Minister Alex Bornyakov said on being asked about the earlier statement that they would only buy non-lethal weapons through crypto donations.

Russia invaded Ukraine in February, prompting the country to launch multiple donation drives in an effort to beef up its defenses and equipment using crypto in an unprecedented way.

The breakdown also confirmed what government officials had previously told CoinDesk about using crypto donations to buy drones, medical kits for soldiers and thermal imagers.

Bornyakov told CoinDesk that more than $5 million spent on “weapons requested by the Ministry of Defence” were “lethal weapons.”

“We don’t want to inform Russia which lethal weapons we are buying,” Bornyakov said.

Bornyakov said the lethal weapons were “defense weapons, not offensive ones,” but on being asked what are “defense weapons” he said “no comment.”

“Our commitment to transparency and accountability allow people who donated crypto see exactly how their donations have been distributed. In order to prevent the occupants from tracking efforts, we have decided not to reveal some sensitive information until we have won the war,” he added.

It’s a sharp contrast to Ukraine’s original breakdown of how it spent its funds; officials had initially stated that it was using the crypto funds only to buy non-lethal equipment.

Dyma Budorin, CEO of Ukrainian startup Hacken, said the use of crypto to buy lethal weapons is “sensitive.” Hacken provides cyber security to crypto exchanges and has a collection of "hacktivists" attacking Russian institutions.

“If the fund is using crypto to buy lethal arms it should be clearly stated from day zero because this is very sensitive and people should know it,” Budorin said.

Patreon, a subscription platform for artists and creatives, has previously removed the Ukrainian non-profit “Come Back Alive” for using contributions to finance and train military personnel, a violation of the platform’s policy that doesn't allow it to be used for funding weapons or military activity.

The breakdown was also published by Minister Mykhailo Fedorov with the goal of increasing transparency and inspiring confidence in donors, an early commitment by the Ministry.

The spending accounts for $54 million out of the current $60 million raised by the Crypto Fund of Ukraine, while the remaining funds are still being spent, Bornyakov said.

“We aren’t going to give a list of every single thing we bought, but this is a start. We are still continuing to purchase night vision goggles and bulletproof vests. But we have started spending more on fighting the propaganda. This is new. We have also started spending on new Ukrainian media, United24, an English news platform,” Bornyakov told CoinDesk in a recent interview.

Ukraine bought 213 UAVs, spending $11,887,936. This made drones the biggest spending category.

The next four categories include about $7 million spent on 8,460 armored vests, $5.7 million spent on five computer hardware and software packages, $5 million spent on a worldwide anti-war media campaign and another $5 million spent on an unknown quantity of weapons requested by the Ministry of Defense.

Field rations account for the highest category in terms of quantity. The country bought a total of 416,900 field rations through crypto donations.

Bornyakov has also previously said that “the crypto fund is being used to purchase non-lethal equipment for military purposes such as bulletproof vests, night vision goggles, military-grade food rations and medical equipment that helps with hemostasis such as tourniquets.”

The other major expenses in terms of quantity were medical. A total of 105,831 medicines and 31,065 military medical kits have been bought.

Ukraine has also bought close to 80,000 items of military clothing and accessories (79,369). This does not include 8,460 armor vests or 5,061 digital rifle scopes.

Read More: Where the Coins Go: Inside Ukraine’s $135M Wartime Fundraise

UPDATE (August 17, 19:34 UTC): Updated with comments from Bornyakov about the types of weapons that were bought.