Russia-Ukraine Crisis Fuel High-risk Crypto Activities in Eastern Europe – Chainalysis

The Russian-Ukraine crisis has impacted all aspects of life, especially for the participating nations. The cryptosphere is no exception. 

According to a recent study by US-based blockchain analysis firm, Chainalysis, high-risk crypto activities have spiked up in the Eastern Europe region. High-risk crypto activity is borne from interaction with high-risk crypto exchanges. These exchanges require little or no know-your-customer (KYC) information.

The study reveals that about 18.2% of all the crypto transactions carried out in the region have been confirmed risky or illicit. This is the highest of any region measured by Chainalysis. Some of these illicit activities come from relating to high-risk crypto exchanges, especially the ones that do not require customers to submit KYC information. 

The region is the fifth largest cryptocurrency market with $630.9 billion in value received on-chain between July 2021 and June 2020 according to Chainalysis. This figure represents over 10% of global transaction activity during the time in view.

Crypto Use Following Russian-Ukraine Crisis

The sanctions placed on Russia following its invasion of Ukraine pushed many international crypto firms to stop their services in the country. This left Russians at the mercy of new riskier exchanges that require little or no KYC information. 

Recall that earlier in the month, the European Commission and member states agreed on the 8th wave of sanctions against Russia. As a result of the new sanctions, Moscow will lose about €7 billion in revenue signaling the EU’s support for Ukraine in the ongoing war.

Russia has since turned to crypto as an avenue to evade these sanctions which resulted in the use of crypto for both licit and illicit purposes. The country has since changed its position about cryptocurrencies and is now trying to make provisions for trade in digital assets.

On the other hand, Ukraine enjoyed a sharp increase in crypto transactions. Most of these transactions in the form of donations were for national support and assistance programs in the wake of the war. The nation’s Minister for digital transformation believes cryptocurrencies were essential in its fight against Russia.