Cryptocurrency crash devalues Ukraine government’s crypto fundraise

Ukraine, which has been hit by a three-month war, plans to continue exploiting crypto-investors to help raise money after a fall in prices decimated the country’s efforts to raise money in May.

Following the Russian invasion of Ukraine on February 24, the Ukrainian government used social media to solicit donations of cryptocurrencies. Ukraine’s Deputy Prime Minister Mykhailo Fedorov tried to gather crypto investors this week at the World Economic Forum in Davos.

On March 19, the government’s “Aid for Ukraine” fund said it had raised more than $ 60 million in cryptocurrencies. But two months later, on May 19, the total value collected was worth $ 51.5 million, said Ukraine’s Deputy Minister of Digital Transformation Alex Bornyakov.

Cryptocurrencies have fallen sharply in recent weeks. Bitcoin has lost more than 20% of its price so far in May, after a decline of 17% in April, which highlights the risks for holders of the highly volatile assets.

All funds raised in the “Aid for Ukraine” fund were stored in cryptocurrency, but the government was able to spend $ 45 million of that on equipment for the Ukrainian army before the crash, Bornyakov said in written answers to Reuters questions.

Ukraine has financed its war efforts in part with cryptocurrencies. The year before the war saw an increase in bitcoin donations to Ukrainian volunteer groups, some of whom supplied equipment to government forces. Although crypto may provide some much-needed funds, Kyiv estimated that it will need $ 15 billion over the next three months to help its war-torn economy recover. Despite the volatility, cryptocurrencies still appeal to Ukrainians who want to raise money.

Ukraine’s largest independent beer brand, Obolon, plans to sell non-fungal tokens (NFT) to help it distribute free water for humanitarian aid. It follows the leadership of Ukraine’s Ministry of Digital Transformation, which has collected 286 ethers (approximately $ 550,000) with its online “Museum of War” NFT collection.

Obolon plans to sell 5,000 NFT for 0.1 ether (about $ 200), which can be exchanged for a post-war anniversary beer bottle. “This project is directly to help us continue to scale, because today the financial situation in the company is difficult because the economic situation in Ukraine is very difficult,” said Olexander Chub, Obolon’s head of foreign trade, in a video interview.

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