Crypto Donations Are About More Than Censorship-Resistance

The biggest crypto news and ideas of the day

Feb. 28, 2022

Was this newsletter forwarded to you? Sign up here.

Supported by

Welcome to The Node.

In today's newsletter: Tech billionaire Elon Musk pledges to rescue Ukraine's internet (though details are scant). The E.U. isolates Russia, targets select banks and financial institutions. BitConnect founder Satish Kumbhani charged with defrauding investors of $2.4 billion.

Questions? Feedback? We'd love to hear from you – simply reply to this email.

–Daniel Kuhn

Today's must-reads

Top Shelf

CHARITABLE EFFORTS: Elon Musk, tech billionaire and founder of aerospace manufacturer SpaceX, has pledged to rescue Ukraine's internet after the country's Vice Prime Minister Mykhailo Fedorov reached out to him via Twitter. Ukraine's infrastructure has been knocked partially offline following the Russian invasion, which Musk will address by setting up his Starlink satellites to beam connectivity – though details are scarce. Meanwhile, Binance will donate $10 million to intergovernmental and non-governmental organizations including the Red Cross to provide emergency relief to those affected by the humanitarian crisis. Some $20 million in BTC and ETH has already been donated to the Ukrainian government, including small, unattached efforts UkraineDAO, founded by punk band Pussy Riot, and social club PleasrDAO, which is bidding on an NFT with proceeds reportedly going to charitable efforts.

CRYPTO SURVEILLED: Meanwhile, Western powers are doing much to sanction Russia and block the ability of its central bank to access and use its strategic reserves. Notably, the European Union has "resolved" to isolate Russia from the international financial system's backbone, Swift, by targeting a few banks and financial institutions. In addition, Ukraine is calling for crypto exchanges to block Russian use of those on-ramps and greater surveillance intelligence on Russian politicians' crypto wallets (which they may be using to preserve or move their wealth out of the cratering ruble). U.K. regulators are also stepping up its enforcement over crypto exchanges.

Follow CoinDesk's continuing coverage of Ukraine.

PONZI CHARGED: The U.S. Department of Justice announced Friday that a federal grand jury charged BitConnect founder Satish Kumbhani with defrauding investors of some $2.4 billion through its lending scheme by running a "global Ponzi scheme," among other charges. BitConnect collapsed in dramatic fashion in 2018, shuttering its exchange and lending platforms within a week after receiving cease-and-desist orders from U.S. state regulators. The company attempted to continue raising proceeds through an initial coin offering (ICO). Kumbhani was already sued by the U.S. Securities and Exchange Commission (SEC) in late 2021 on similar charges.

CHAINLINK: A subsidiary of Saudi Telecom Company is the first telecommunications firm in the Middle East and North Africa (MENA) region to start working with crypto infrastructure firm Chainlink, the undisputed heavyweight when it comes to providing blockchain-based smart contracts with external data (which partners with Deutsche Telekom and Swisscom telecoms).

BEAR MARKET? An analysis of cryptocurrency flows between personal and exchange-based wallets shows a "lack of directional conviction" in the market, Bank of America said in a note entitled "Digital Assets: In the Flow." Tightening by the U.S. Federal Reserve and macroeconomic headwinds are likely to limit upside for cryptocurrencies over the next six months. This won't, however, be a "crypto winter" given the level of user adoption and growth in development activity, analysts led by Alkesh Shah wrote in the note Friday. Bitcoin exchange outflows suggest that buying on dips is muted, while exchange inflows for ether show the potential for continued price headwinds, the bank said.

What's the best way to beat the crypto market volatility? By sidestepping it altogether.

This is the premise of Earn – Nexo's industry-leading solution, that allows you to utilize your idle assets into a predictable source of passive income.

Unlock your crypto's full potential by earning up to 20% interest on hot assets, including BTC, ETH, AVAX, SOL, FTM, LUNA, DOT, MATIC and more.

Get daily compounding interest with our FLEX offering, or maximize your yield by opting for our Fixed Terms. Whatever you choose, rest assured – all assets in your Nexo account benefit from a $375M insurance by our industry-renowned custodians.

Get the ball rolling by depositing your digital assets till March 31 for a welcome bonus of up to $100.

Open your account now at nexo.io

Overheard on CoinDesk TV...

Sound Bites

"This is something new: Bringing in crypto actors, non-state actors, to crowdfund warfare."

–Liat Shetret, director of regulatory affairs and compliance policy at Solidus Labs, a compliance software vendor, on CoinDesk TV's "First Mover."

What others are writing...

Off-Chain Signals

World's biggest crypto exchange Binance says it will not block all Russian accounts despite Ukraine request (CBDC)
eBay to add crypto payment options soon, says CEO (Cointelegraph)
Decentralized data storage solution Arweave archives millions of documents from Ukraine (Crypto Slate)
Nvidia 'hashrate unlocker' likely attempt to build crypto mining botnet (Protos)
Leading English-language newspaper in Ukraine launches crypto donations (The Block)
Israeli Defense Ministry Seizes Crypto Wallets Linked to Hamas Funding (Decrypt)
$70 Million Later, Pixelmon's Founder Calls Artwork Reveal

'Horrible Mistake' (Decrypt)
Governments Have Been Seizing Stolen Bitcoin and Ethereum. How? (Decrypt)

It's never been easier to earn interest on Bitcoin and Tether with BitMEX EARN. Enjoy up to 10% APR on Tether and 4% on Bitcoin, fully backed by the BitMEX Insurance Fund.

With new products, reliable security, and responsive customer service, there's never been a better time to join BitMEX. Start earning interest today by subscribing to EARN here.

BitMEX products and services are not available to US Persons and in other specified jurisdictions.

Putting the news into perspective

The Takeaway

Why Crypto? Ukraine Fundraisers' Choice May Be Driven by Convenience

It's not about censorship-resistance or speed as much as keeping money in the system. If you deal in crypto regularly, it makes sense to send charitable contributions in crypto, too.

In light of Russia's invasion of Ukraine, humanitarian and military-adjacent organizations have received millions of dollars in charitable contributions from overseas – a massive outpouring of international support for Ukraine's resistance.

And while (in most cases) fiat money remains a viable way to support Ukraine, a decent amount of the donations has come in the form of cryptocurrency:

The Ukrainian government has been soliciting crypto donations from its official Twitter account in the form of bitcoin, ether and the dollar-denominated stablecoin tether, according to the founder of Kuna, the Ukrainian exchange reportedly facilitating the donations. That money is being used to support evacuees and "local military personnel" with drones, heat-vision goggles and gas. The blockchain analytics firm Elliptic reported that the Ukrainian government has raised around $14 million in crypto, so far.

A community-led fundraising effort called UkraineDAO has followed suit, organizing a non-fungible token (NFT) auction on behalf of a Ukrainian non-government organization called Come Back Alive, which was kicked off Patreon for violating the network's terms of service. The crowdfunding platform said the organization was "financ[ing] and train[ing] military personnel," and Come Back Alive's website promotes training programs for snipers. The NFT auction is ongoing, and it has already raised over $3.5 million in ETH.

A brand new organization called RELI3F, spearheaded by prominent crypto influencers like Andrew Wang, raised over $1 million in ETH from a hastily assembled NFT collection. On Twitter, the group said it's split about half of that money among Come Back Alive, local Ukrainian media vetted by [a local English-language news organization called The Kyiv Independent] and the Hospitallers medical battalion.

Individual investors and influencers have jumped in, too: Crypto billionaire Sam Bankman-Fried gave $250,000 in tether, and Chain.com CEO Deepak Thapliyal donated 100 ETH, or about $277,000. Bankman-Fried also said his company, FTX, was giving $25 to every Ukrainian user.

Murat Pak, an NFT artist who recently said that politics "bores" him, and that "none of [his] moves are political," nonetheless claims to have donated $1.8 million in ETH "to human rights" in Ukraine.

As always with crypto, shills and opportunists abound. Gavin Wood, founder of the cryptocurrency polkadot (DOT), suggested he would donate $5 million if the government promoted the token by "post[ing] a DOT address." In other words, he would donate if the government would accept his token. A few days ago, Vice spotlighted a deeply tasteless but also probably well-meaning meme depicting a Bored Ape NFT expressing support for the people of Ukraine.

Read the full article here.

–Will Gottsegen

A Satoshi Nakamoto NFT for the Metaverse

No one knows who Satoshi Nakamoto is. This is one of the central mysteries of the cryptocurrency industry. To recognize his contribution to the birth of the Bitcoin ecosystem, BitBTC.money is creating a series of Satoshi Nakamoto avatar NFTs that will live in the metaverse. These in turn are being designed to pay tribute to other important Bitcoin contributors.

The core members of BitBTC met Minhua Ouyang (Bonnybb.eth) in New York, where they learned she had started creating NFTs in July 2019 and was one of the earliest NFT creators in the city. After brainstorming with BitBTC team members, she decided to create the Satoshi NFT project.

*This is sponsored content from BitBTC.