Ukraine Crypto Donation Scams: Look out for These Red Flags

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There has been a surge in cryptocurrency donation campaigns for Ukraine since the start of the invasion, with funds raised totaling more than $135.7 million dollars between February 22 and March 28 alone, a new report by blockchain intelligence company TRM Labs found. The company identified some fundraising campaigns using new approaches to raise funds, but also dozens of scams.

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In the wake of an unprecedented wave of sanctions on Russia, earlier this month, the company launched a new screening tool to help members of the crypto ecosystem who wish to be alerted when sanctioned crypto addresses are engaging with their platforms, including addresses linked to newly sanctioned Russian designated individuals and entities.

Now, in the new report, TRM outlines indicators of potential flags of illegitimate crypto donation campaigns.

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Ari Redbord, a former senior advisor for the U.S. Treasury Department and now head of Legal and Government Affairs at TRM Labs, told GOBankingRates that the key is to be hyper-vigilant just like you would anytime you are transacting with an unknown entity.

“That said, there are red flag you can look for like did the donation site disappear hours after launching, you should google the crypto address to see if there are any online flags, check out the Twitter presence to see if verified, and ask does the website look legitimate or do you have concerns,” he said.

Some of the tips TRM outlines for individual donors include vetting the internet presence of a donation campaign operator prior to donating and reading reviews from prior donors or running targeted searches on the donation addresses to see if scam-related flags appear on the open web.

There are also several potential indicators of illegitimate donation campaigns, for example, a crypto-donation campaign taking down its web domain or deleting a Twitter handle hours after launching. Donors should also be wary of crypto-donation campaigns holding an unverified Twitter handle or receiving endorsements on Twitter from unverified accounts, as well as having a large number of new Twitter users following them, suggesting bot-like activity, TRM said.

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“The bottom line is it is obviously important to support the export in Ukraine but you need to be safe and smart — vet the internet presence of a donation campaign operator prior to donating and read reviews from prior donors or run targeted searches on the donation addresses to see if scam-related flags appear on the open web,” Redbord said.

On a positive note, while obvious scam campaigns represented about half of the over 50 distinct crypto-donation campaigns alleging to send funds to humanitarian or military efforts that TRM investigators analyzed, but accounted for a small percentage of overall trade volume.

In terms of breakdown, TRM found that official government entities, including Aid for Ukraine, the Cyberpolice of Ukraine and the Ministry of Health of Ukraine, received more than $50 million inbound donations so far.

See: How To Write Off Donations
Find: Charitable Giving Surges in 2021

In addition, more than 85% of the campaigns solicited donations in Bitcoin and Ethereum, with Tron, Litecoin, and Binance Smart Chain following distantly behind, TRM said. 

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

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