Pro-Russian groups raise cryptocurrency to support military operations

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Russian paramilitary groups are raising cryptocurrency funds using the Telegram messaging app, according to research published by TRM Labs.

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Pro-Russian groups are raising cryptocurrency funds to support paramilitary operations and evade US sanctions as the war with Ukraine continues, a research report released Monday found.

As of September 22, these fundraising groups had raised $400,000 in cryptocurrency since the invasion began on February 24, according to TRM Labs, a digital asset compliance and risk management firm.

The research found that groups, using the encrypted messaging app Telegram, are offering ways for people to send funds which are used to supply Russian-affiliated militias and support combat training in locations near the border with Ukraine.

One group identified by TRM Labs to raise funds is Task Force Rusich, which the US Treasury describes as a “neo-Nazi paramilitary group that saw combat alongside the Russian military in Ukraine.” The Treasury Department’s Office of Foreign Assets Control (OFCA) sanctioned Task Force Rusich.

On a Telegram channel, TRM Labs discovered that this group was seeking to raise funds for items such as thermal imaging equipment and radios.

Novorossia’s Aid Coordination Center, which was established in 2014 to support Russian operations in Ukraine, raised about $21,000 in cryptocurrency, mostly bitcoin, for the purpose of buying drones, according to The report.

Russia has been hit with a number of sanctions after its unprovoked invasion of Ukraine earlier this year, which was aimed at cutting it off from the global financial system. At the time, there were fears that Russia could use cryptocurrency to evade these sanctions. However, experts said there is not enough liquidity in the crypto system at the scale that Russia would need to move money.

But with paramilitary groups, they move money on a smaller scale, which is enough for the items they need to buy.

According to Ari Redbord, head of legal and government affairs at TRM Labs, these groups are likely using exchanges that are not necessarily compliant with anti-money laundering and other regulations.

“They are probably using non-compliant exchanges to accelerate these funds [into fiat currency]“, Redbord told CNBC.

“And you can do it. You just can’t do it on a large scale. And I think that’s where…we’ll say, will there be more? Of course there will be more. But will it be billions of dollars? Very unlikely.”

Redbord said TRM Labs used a combination of publicly available wallet addresses as well as cross-checking other websites and online activity to identify Russia-linked groups. However, he said it was not possible to know whether these groups worked with the Russian government or were in any way supported by the Kremlin.

Cryptocurrencies came into the limelight during the war between Russia and Ukraine. Ukraine sought donations via digital coins, which can be sent quickly across the world. But they are now also used by Russian paramilitary groups.

“I think an interesting part of this story is that crypto is just a form of payment in these cases. It’s a way to move funds. And there’s an example of using it for good and an example of use for evil in that context,” Redbord said.

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