November 16, 2022 Inquiry & Analysis Series No. 1663

Russian Neo-Nazi Groups Are Using Cryptocurrency To Help Fund Ukraine War Activity, As U.S. Government Acts Against Them – Heralding A New Era Of Industry Regulations

November 16, 2022 | By Steven Stalinsky, Ph.D., R. Sosnow, and A. Strandberg*
Russia, Ukraine | Inquiry & Analysis Series No. 1663


Recent events are proving that the Russia-Ukraine war – a major conflict in which cryptocurrency plays a significant role – could usher in serious government regulation of cryptocurrency. As stated in our major May 2022 study on this issue, the war is "highlighting the extent to which neo-Nazis and white supremacists have migrated to cryptocurrency. The use of cyber finance in the war has already gotten the attention of government leaders involved in financial regulation, and it has been a subject of increased discussion. But knowledge of how extremists are using cryptocurrency in the war, as it develops, will very likely prove to be a catalyst for regulations for the crypto industry, which has been a topic of debate for some time."[1]

Over the past few months, the extent of pro-Russian use of cryptocurrency has become increasingly apparent. According to a July 2022 study, 54 pro-Russian paramilitary and other groups in Ukraine had received over $2.2 million in cryptocurrency, primarily Bitcoin and Ether but also Tether, Litecoin, and Dogecoin, to fund their operations, raised primarily through social media crowdfunding efforts. The crypto donations sent to these organizations have reportedly been used to support everything from the financing of pro-Russian propaganda sites to the purchase of military items, like drones, weapons, bulletproof vests, communication devices and various other supplies.[2]

The Security Service of Ukraine (SSU) announced on August 24 that it had seized $19,500 from a crypto wallet that was being used to fund a Russian group, after implementing a mechanism to identify and block wallets raising funds for the Russian army. According to its announcement, the funds had been raised through crowdfunding campaigns on social media aimed at Russian supporters. Further investigation revealed that the proceeds had been used to purchase military equipment for the Russia-backed separatist fighters in the region of Luhansk and Donetsk.[3]

Many of the promoters of these Russian fundraising campaigns were entities reportedly sanctioned by the U.S. Treasury Department's Office of Foreign Assets Control (OFAC), among them the Russian Imperial Movement and a supporter of Project Terricon, which solicits cryptocurrency donations to support Donbas militia groups.

As of July, Project Terricon had received roughly 11% of its funds indirectly from "crypto mixers" – which allow a user to deposit one cryptocurrency in its protocol, or software, and then withdraw the same amount, giving it a different address and severing the trail of the transaction, and which have been used for years by criminals to launder millions of dollars' worth of cryptocurrency.[4] It had sent over 29% of its funds to Bitzlato, a Moscow-headquartered exchange that has facilitated approximately $1 billion worth of crypto money laundering since 2019.[5]

According to media reports, pro-Russia groups, including a Russian neo-Nazi paramilitary group that has participated in combat alongside Russia's military in Ukraine, had raised $400,000 in cryptocurrency, largely via the encrypted messaging app Telegram, since the start of the invasion on February 24. The Novorossia Aid Coordinating Center, set up in 2014 to support Russian operations in Ukraine, had reportedly raised about $21,000 in cryptocurrency, mainly bitcoin, with the aim of buying drones.[6]

On September 15, the Treasury Department's OFAC announced that "as part of its continued response to Russia's horrific war of aggression against Ukraine," it was sanctioning a long list of Russian officials and companies, including listing, as a Specially Designated Entity, the Russian neo-Nazi paramilitary group and two of its senior leaders.[7]

This Russian neo-Nazi paramilitary group, an affiliate of the OFAC-designated Private Military Company Wagner, is active in cryptocurrency and is using it to its fight against Ukraine.[8] Five cryptocurrency wallet addresses connected to it were included in the designation – two Bitcoin (XBT), two Ethereum (ETH), and one USDT (Tether).[9]

The fighters of the Russian neo-Nazi paramilitary group in photo of training this summer, posted on Telegram

The MEMRI Domestic Terrorism Threat Monitor (DTTM) has been aware of the Russian neo-Nazi paramilitary group and its cryptocurrency funding efforts since early in the war. The group is one of many Russian extremist and mercenary groups we monitored who are engaging in online fundraising in cryptocurrency to support purchases of military and tactical equipment purchases and other needs.

Secretary of State Antony Blinken said of the sanctioning: "Today, we are taking actions against major Russian defense entities, key advanced-technology firms that support Russia's defense industrial base, and financial infrastructure... The United States will continue to take actions against those who support Russia's defense-industrial base."[10]

U. S. Treasury Details Designations Of "Russian Neo-Nazi Militia Fighting In Ukraine"

In its September 15 press release, titled "Treasury Targets Additional Facilitators of Russia's Aggression in Ukraine," Treasury Department defines the entity as "a neo-Nazi paramilitary group that has participated in combat alongside Russia's military in Ukraine" and said that it also has a long history of fighting alongside Russia-backed proxies in Donbas.

It added that the Russian neo-Nazi paramilitary group had been designated "pursuant to E.O. 14024 for being responsible for or complicit in, or for having directly or indirectly engaged or attempted to engage in, activities that undermine the peace, security, political stability, or territorial integrity of the United States, its allies, or its partners," directly or indirectly on behalf of or for the benefit of the Russian government. Two individuals, it said, were designated as its leaders, noting that one of them is also sanctioned by Australia, Canada, the EU, Switzerland, and the UK.[11]

According to reports, thousands of dollars have passed through the five cryptocurrency addresses noted in the designation, and some were active as recently as this week. However, the crypto wallet addresses above are reportedly only part of the Russian neo-Nazi paramilitary group's use of blockchain technology to fund its efforts.[12]

Following the sanctions announcement, at a September 20, 2022 hearing of the Senate Banking Committee about sanctions on Russia, Treasury Department assistant secretary for terrorist financing and financial crimes Elizabeth Rosenberg suggested that "crypto mixers" such as or Tornado Cash should also be sanctioned. She said that this could be an effective way to signal that the U.S. was acting to prevent entities from circumventing sanctions: "When [sanctions] can serve as a deterrent to any criminal that would seek to use a mixer in order to launder their funds [...] that's an effective avenue we can use in order to signal that we cannot tolerate money laundering – whether that's for a Russian criminal actor, an Iranian, a North Korean or wherever they may come from."[13]

In July, A Russian neo-Nazi group's Telegram Channel Announced That The Group's Account On Binance Had Been Blocked

It is notable that on July 1, the Telegram channel of a Russian neo-Nazi group, which reports on the group's operations in the war in Ukraine, announced that during the fundraising efforts for military equipment, its account with the Binance cryptocurrency exchange had been blocked. According to the screenshot included in the post, which shows a chat with a manager at Binance, this was due to an ongoing investigation by Ukrainian authorities. The Binance representative advised a member of the group to request more information from Ukrainian authorities for details. The neo-Nazi replied, "Are you kidding? What is Ukraine?"

Strongly condemning Binance's move, the channel complained that there had been no advance warning about the blocking: "Such a policy has completely discredited Binance and its management. I recommend that Russian people not use Binance crypto-exchange services in order to avoid losing funds at the whim of its pro-khokhol [a derogatory term for Ukrainians] management." It added that all funds had been successfully transferred before the account was blocked.

The channel went on to advise users not to store assets in crypto-exchange accounts but to use hardware wallets instead. It also links to a Google Docs document titled "Cryptocurrency Aid For Donbass And Russian Warriors," which is a step-by-step guide to buying, storing, and transferring cryptocurrency. Among other things, the document urges users to transfer assets in the Tether cryptocurrency, or if that is not available, in USDC and BUSD. The document recommends the Trust Wallet app, and provides instructions in how to use it, as well as the BestChange service for exchanging cryptocurrency and e-money.[14] Trust Wallet is based in Mountain View, California,[15] and BestChange is based in Ohio.[16]

How to use Trust Wallet, from the document

Russian Extremists' Swift Reactions To The Treasury Designation Of A Group As Russian Neo-Nazi Militia Fighting In Ukraine

MEMRI DTTM research found swift reactions to the Treasury designation of the neo-Nazi group as Russian Neo-Nazi Militia Fighting In Ukraine. On September 18, three days after the Treasury's announcement, the Ukrainian neo-Nazi channel on Telegram posted a video of the Russian neo-Nazi group's leader thanking his supporters for helping raise over 1.5 million rubles (about $25,000), presumably for purchasing equipment.  In the photo, he is holding a Nazi Kriegsmarine flag. 

The next day, September 19, also on Telegram, a Russian neo-Nazi Telegram channel posted a photo of boxes of two-way digital radios, mostly Motorola 4400s and 4801s, apparently purchased with donated funds. The channel added its thanks to followers for their donations.


Following Sanctions And Suspension From Telegram, The Russian Neo-Nazi Group Launches New Channels, Continues To Fundraise And Purchase Equipment

The Russian Neo-Nazi group's channel, on September 22, 2022, posted gruesome instructions for Russian troops "for disposing of prisoners of war from the Armed Forces of Ukraine" and guidelines for "offer[ing] relatives [the opportunity] to buy information about the burial place of their son, husband, and other relatives," including the use of Bitcoin. The channel wrote: "1. If possible, do not report to the higher command about the presence of captured enemy soldiers and officers. If the report was carried out (to improve reporting), then report that the enemy is wounded and may die (even if this is not the case). 2. If there is time and opportunity, interrogate the captured enemy soldiers. First, without physical pressure, then again, with elements of impact such as chopping off fingers, cutting off an ear, blows to the groin and joints, driving needles under the nails. The main thing is for the enemy to be able to consciously answer questions. [...] 3. After interrogation, either shoot the prisoners [.....] or slaughter them. […] The second option is to wound the prisoners and send them to the hospital. It is necessary to inflict a wound in the area of the liver (in order to exclude the chance of survival) and groin. [...] Don't be afraid to kill the prisoners! [...]There will be no punishment for this."

The post continued: "By the way, if you can identify the bodies of those killed, don't give them away like that either. Take the coordinates of the exact burial place, take a photo so that the face can be seen and offer relatives [the opportunity] to buy information about the burial place of their son, husband, and other relatives for the amount of $2,000-5,000. Money can be transferred to a bitcoin wallet (and you can spend it on equipment, drones, etc.)."

On September 23, 2022, the group's Telegram channel was removed by Telegram, after it published calls for executing Ukrainian POWs.[17] Since then, two new channels affiliated with the group have been launched; they posted photos of the detachment training and testing new military equipment. Additionally, despite the sanctions on the group's cryptocurrency accounts, the organization is apparently continuing fundraising efforts to purchase equipment, via third parties. For instance, a call for donations for military equipment for Russian troops was circulated by its channel on September 25, 2022. The post includes a bank account number as well as Bitcoin and Tether accounts.[18]   

In an October 2, 2022 post, the channel thanked a group and Telegram users for providing it with equipment.

The post showed sleeping bags as well as several weapons.

On October 15, 2022, the group's Telegram channel posted a photo of a stack of boxes of drones that it said were purchased with donated funds, adding "Wow! Great job!"

This report will review earlier U.S. government concerns about extremists' use of cryptocurrency in the Russia-Ukraine war, and its use by Russian extremist groups and their supporters to fund their operations in the war, and includes excerpts of the seminal MEMRI DTTM study The Eye Of The Storm: [Domestic] Terrorists, Neo-Nazis, And White Supremacists Using Cryptocurrency, published July 14, 2022.

Early U.S. Government Reactions To Extremist Use Of Cryptocurrency In Russia-Ukraine War

The July 14 MEMRI DTTM study The Eye Of The Storm: [Domestic] Terrorists, Neo-Nazis, And White Supremacists Using Cryptocurrency detailed how Russia's launch of its invasion of Ukraine on February 24, 2022 was closely followed by activity on Capitol Hill concerning the need to regulate cryptocurrency. This came in the form of President Biden's signing, on March 9, of the "Executive Order on Ensuring Responsible Development of Digital Assets." While one focus of this discussion following the invasion has been Russia's urgent need to cope with severe economic sanctions, there is an addition aspect of this issue – the use of cryptocurrency by neo-Nazis and white supremacists to support extremists in the war.

Federal Reserve Chairman Jerome Powell said at a March 2 hearing of the House Financial Services Committee that the Ukraine war "underscored the need for Congressional action on digital finance, including cryptocurrencies." He added: "There isn't in place the kind of regulation framework that needs to be there... What's needed is a framework, in particular, ways to prevent these unbacked cryptocurrencies from serving as a vehicle for terrorist financing..."[19]

House members also stressed this point; at the hearing, Rep. Jim Himes (D-CT) demanded regulation, saying: "It is past time for all of us to lead on creating a regulatory environment in which we, rather than the world's despots, terrorists, and money launderers, benefit from the emergence of cryptocurrency... It is time for all of us to act."[20]

Additionally, Senate Banking Committee members underlined the "growing concerns that Russia could use cryptocurrencies to circumvent the broad new sanctions it faces," in a March 2 letter to Treasury Secretary Janet Yellen.[21]

However, at a March 10, 2022 hearing of the Senate Select Committee on Intelligence, FBI director Christopher Wray was asked by Sen. Martin Heinrich (D-NM) whether Russia could respond to the economic impact of sanctions placed on it by the U.S. by using cryptocurrency. Wray responded that "the Russians' ability to circumvent the sanctions with cryptocurrency is probably highly overestimated on the part of maybe them and others." He added: "We are, as a community and with our partners overseas, far more effective on that than... they appreciate, and there's a lot of expertise in terms of tools and strategies to help block that kind of effort."[22]

These and other recent activities culminated, as noted, in President Biden's signing of the executive order outlining the U.S. government's strategy for cryptocurrencies. Described by the White House as the "first whole-of-government strategy" on digital assets,[23] it instructs federal agencies to study the risks of the explosion in popularity of cryptocurrencies and to consider the creation of a U.S. digital currency. Stating that "We must take strong steps," it addresses the national security risks of "illicit" misuse of cryptocurrency, and emphasizes the necessity of "regulation, oversight, [and] law enforcement action."[24]

The Russia-Ukraine Crisis Shows That Washington Needs To Treat Crypto Regulation As Urgent

When the MEMRI DTTM study The Eye Of The Storm: [Domestic] Terrorists, Neo-Nazis, And White Supremacists Using Cryptocurrency was published, there was little action on the part of the U.S. government to go after bad actors using cryptocurrency in the Russia-Ukraine war. However, after the Treasury Department's announcement, this activity is gaining momentum.

Events in the Russia-Ukraine crisis, as they have unfolded, have shone a light on Washington's misguided thinking that there is no urgency in regulating the crypto industry. The government's early steps on the regulation issue did not adequately take into account the destructive role being played by cryptocurrency in the crisis – and this, once exposed, will be a catalyst in the push for regulation.

However, within a month of Russia's invasion of Ukraine, it became clear that many who are sending and soliciting crypto donations for a range of purposes in the war have extremist affiliations, including neo-Nazi and white supremacist groups and their supporters in the U.S. and globally.[25] Primarily via Telegram, these groups are promoting fundraising campaigns by like-minded groups and paramilitaries in Russia and pro-Russia groups in Ukraine, soliciting donations in Bitcoin, Monero, Ethereum, and others – for purchase of military equipment, offering upgraded training, forming special anti-Russian tactical units, supporting members fighting in Ukraine, purchasing military, medicinal, and logistical equipment, and "lifesaving aid."

From The MEMRI DTTM Study "The Eye Of The Storm: [Domestic] Terrorists, Neo-Nazis, And White Supremacists Using Cryptocurrency"

The following are excerpts from the MEMRI DTTM study The Eye Of The Storm: [Domestic] Terrorists, Neo-Nazis, And White Supremacists Using Cryptocurrency, published July 14, 2022. The study included a chapter on the Russia-Ukraine war and Russian usage of cryptocurrency in it.

Extremist Use Of Cryptocurrency In Russia-Ukraine War Is Setting An Example For Future Conflicts

As the MEMRI DTTM study detailed, counterterrorism authorities in the U.S. and across the West should be concerned about what happens the day after the Russia-Ukraine war ends. Ukraine has the potential to be for neo-Nazis and white supremacists the equivalent of what Afghanistan was for the jihadi movement in the 1980s. The activity of these groups already includes training with weapons, martial arts, and other battle and tactical training. The experience of being on the ground in a real-world conflict situation – compounded by the influx of heavy weaponry and explosives into Ukraine – will allow these groups to arm themselves and gain valuable experience, as they further hone their skills in weapons, planning attacks, using technology in war, including communications and encryption, and using cryptocurrency for clandestine funding of their activity.

Every day, the MEMRI DTTM monitors and documenting these groups' frequent discussions about attacking the U.S. government, or the governments of their own countries, and are only waiting for the opportunity to do so. Some are issuing specific calls for expert assistance – for example, one Russian neo-Nazi skinhead group has called for chemical and explosives experts to help them carry out chemical attacks. Another future danger is the transnational connections that these groups will develop, cultivate, and expand – this was already happening pre-pandemic, but was hindered over the past two years due to travel restrictions. These factors, combined with the rise in ultranationalism in Eastern Europe that will inevitably follow this war, will prove to be a major cause for concern in coming years.

U.S. and Western counterterrorism agencies should not be turning a blind eye to how cryptocurrency is being used in the context of Ukraine, particularly because the skills and knowledge that these anti-government extremists are now acquiring will ultimately be used against Western governments. Those who have joined the fighting are gaining experience in combat, guerilla warfare, using explosives and bombs, sniper activity, and more.[26] The funds being raised for them in cryptocurrency are being used for planning attacks, purchasing weapons, and obtaining drones, thermal imaging equipment, bulletproof vests, and mobile phones.[27]

The use of cryptocurrency in the Ukraine crisis by criminal and extremist elements is becoming increasingly well known. The likely outcome of this should be a government reassessment of its earlier set policy, and the scale may finally tip towards regulation. Cryptocurrency companies have not said or done much to police themselves – a recent focus of theirs has even been touting the positive impact of cryptocurrency in Ukraine – and if they do not start soon, governments will be forced to.[28]

A Look At A Russian Neo-Nazi Group's Use Of Cryptocurrency Leading Up To Its Sanctioning

The Russian neo-Nazi group reports on its operations and activity on Telegram. It posts images of members training and raises funds in cryptocurrency to purchase equipment for the group's fighters.[29]

This Telegram channel posted, on November 5, 2022, a fundraising appeal for the purchase of Russian-made "Legat 335" thermal imagers, which cost about $4,516. Urging readers to donate either funds or the equipment itself, the post provided details of its bank and crypto-currency accounts.



[2], July 29, 2022.

[3], August 24, 2022.

[4], March 26, 2022.

[5], July 29, 2022

[6], October 3, 2022.

[7], September 15, 2022.

[8], September 15, 2022.

[9], September 15, 2022.

[10], September 15, 2022.

[11], September 15, 2022.

illicit-financing, September 20, 2022.

[13], September 20, 2022.


07e7769641f92, accessed September 30, 2022.

dbc2a4a0574ads, accessed September 30, 2022. 

[17], September 23, 2022.


[19], March 2, 2022.

[20], March 2, 2022.

[21] 03.01%20Letter%20to%20 Treasury%20re%20 OFAC%2 0crypto%20 sanctions%20 enforcement. pdf, March 2, 2022.

[22], March 10, 2022.

[23], March 14, 2022.

[24];, March 9, 2022.

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[28], March 25, 2022.

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