Cryptocurrency frauds are trying to take advantage of an outpouring of support for Ukraine.
A number of schemes launched in the wake of Russia’s invasion have tried to trick donors into sending crypto to fraudsters, research firm Elliptic said. The largest is a scam cryptocurrency whose value has risen to about $50 million, the firm said, even after it was exposed as a fake.
Legitimate aid groups have been raising funds via cryptocurrencies for Ukraine relief efforts. They were soon joined by the Ukrainian government itself, which has so far received about $56 million in cryptocurrency donations. Much of the effort has been coordinated through Ukraine’s largest exchange, Kuna.
But scams, frauds and Ponzi schemes have been a persistent problem in the crypto markets since the beginning, and are especially virulent during chaotic times. The research firm Chainalysis estimates frauds took in a record $14 billion in 2021.
Crypto and social media are a dangerous combination. Crypto donations are fast, and once confirmed irreversible. And it is easy to create a mock-up of a real donation’s social-media post, change the details for where to send the money, and take advantage of people who aren’t looking closely enough.
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That appears to be what happened in at least one case. A group purporting to represent the Ukrainian government set up a cryptocurrency called Peaceful World and began soliciting donations. They began selling it on the Uniswap platform. Even after it was exposed as a scam, its value kept rising, Elliptic said.
As of Thursday evening, its market value was $50.8 million, according to Elliptic co-founder Tom Robinson.
On Thursday, New York Attorney General Letitia James warned about scams taking advantage of people trying to support Ukraine. “Scammers often take advantage of crises to exploit our generosity and compassion,” she said.
She said donors should take the time to research the groups asking for money, and singled out giving through social media as a risk. “Don’t assume that charities recommended on social-media sites, blogs, or other websites have already been vetted.”
Write to Paul Vigna at Paul.Vigna@wsj.com
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