Blockchain Investigation Firm TRM Labs: Bitcoin Is A Legit & Effective Humanitarian Fundraising Tool Despite Scams

2 min read

Recently, the crypto community has shown an outpouring of support for Ukraine as it defends itself against Russian invasion. One may assume that with such a massive amount of money donated by so many people, there will be scammers trying to take advantage of this generosity.

Scammers have been found preying on those who are donating in hopes to get more money out of them than intended or too refuse any donation at all. Since the Bitcoin address is publicly available and can easily be used without providing identification information; there seems no way one could stop these scams from occurring.

Considering the massive amount of support the crypto community has shown to Ukraine – $135 million raised since Feb. 22, two days before the Russian invasion – it comes as no surprise that scammers have pounced on it.

However, it might surprise you that an industry riddled with scams, hacks, and exploits worth billions of dollars every year has proven adept at spotting and cutting off the bottom feeders looking to make money off Ukraine’s suffering.

Blockchain investigation firm TRM Labs has analyzed 50 crypto fund-raising campaigns in that time period, and more than half of them have been “obvious scam campaigns” that claimed to be sending funds to humanitarian or military causes.

Only a small percentage of the funds donated went to those campaigns, TRM reported in a March 30 report.

Researchers and hosting providers identified most of these scams as such, and their sites were taken down,” the report said. These sites raised anywhere between a few hundred dollars and a couple thousand dollars before they were removed.

Not very successful

One fundraising email, for example, used the word “Ukraine Embassy” without specifying where in the world the embassy was.

“We have sent you a mail from the Ukrainian embassy,” it read. “Now you can stand with us as we defend ourselves against Russian aggression. We are now accepting cryptocurrency donations. Bitcoin, Ethereum, and USDT.”

That was followed by three alphanumeric digital wallet addresses.

It closed: “Thanks, Ukraine Embassy.”

A number of the other alleged scams identified by TRM Labs were sophisticated, with QR code donation links for bitcoins, video of President Zelensky, and a generally slick look – associated with appeals on Twitter and other social media sites such as Facebook.

The fact that they have been hijacked by a giveaway scam and other schemes where someone famous promises to give back double the amount of crypto sent to their address, puts them in good company

Ripple, a cross-border payments firm and its president, Brad Garlinghouse, sued YouTube in 2020 (and settled), alleging that YouTube failed to take down scam websites despite repeated warnings. 

Steve Wozniak tried the same without success, and Ethereum creator Vitalik Buterin described himself as a “non-giver of ETH” on Twitter due to scams.

Investigations found that in addition to the verified and legitimate humanitarian crypto-fundraising organization UkraineDAO – @UkraineDAO – there were more than a dozen other accounts registered with the “UkraineDAO,” according to the investigators.

The lack of verification on Twitter, broken URLs, as well as a large number of new followers suggested bot activity, according to TRM Labs.

A new channel

TRM Labs found that crypto is an effective method and tool for fundraising despite scams, and to some extent because of their poor success rates as well.

UkraineDAO raised $6 million by auctioning a flag NFT, and when paired with another top nongovernmental organization, Come Back Alive, has raised $50 million — roughly the same amount as the Ukrainian government, which embraced — and rapidly legalized — crypto payments.

In addition to embracing crypto, Ukraine has announced plans to build a virtual museum of images of the country and the war’s toll, which will be secured via blockchains.

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