Some of Ukraine’s weapons suppliers are accepting payments directly in crypto, a senior official told CoinDesk Monday.

Ukraine “weaponized” crypto after Russia invaded the European nation at the end of February, raising over $60 million in bitcoin (BTC), ether (ETH) and other cryptocurrencies and immediately spending some of these funds on fuel, food and other supplies – including bulletproof vests for soldiers.

Ukraine’s de facto crypto ministry, the Ministry of Digital Transformation, is facilitating the buying of military equipment based on the demands of the Ministry of Defense, said Alex Bornyakov, the deputy minister at the ministry. The operation involves Kuna, the Ukrainian exchange that set up the donation addresses; two ministries; five signatories and several other government officials as key players.

Bornyakov is the deputy to Mykhailo Fedorov, the Minister of Digital Transformation and vice prime minister. He told CoinDesk he was not in the nation’s capitol of Kyiv but did not specify further.

Spending crypto

At least three of five authorized signatories have to approve any expenditure of Ukraine’s crypto funds. The process has been put in place in order to avoid a situation in which signatories are stuck in bunkers or incommunicado.

“Most of the people are in Ukraine. And it is a terrible situation right now. The war zone is in different parts of Ukraine. It is possible that people could be in a shelter or they can lose connection for days and so we have to have a redundancy plan just in case someone can’t be in touch,” Bornyakov said. The ministry is working with Ukraine’s Kuna exchange in a public-private partnership as the exchange already had an infrastructure in place to receive the funds or transact on behalf of the government.

What also helps Ukraine is some of its vendors are willing to accept crypto payments directly.

“Some of the military suppliers have accounts in crypto. Actually, some of them have companies and bank accounts in jurisdictions where cryptos are allowed. And they can just get crypto in ethereum, bitcoin and, of course, in some stablecoins,” Bornyakov said.

For Bornyakov, crypto has been a more flexible and cheaper tool than bank transfers.

“It is easier, not complicated, transparent, and faster in comparison to a SWIFT transaction, which could take more than a day,” he said.

3 of 5 signatories

Ukraine operates a multisignature wallet to control the donated cryptocurrencies, Bornyakov said.

“I cannot say who controls the multi-sig wallet since it is a security matter,” he said. “We moved to a safe location because it is impossible. A couple of times a day there are airstrikes, sirens, so we have to go in the shelter, the bombings, it’s complicated,” Bornyakov said.

Officials within Ukraine’s Ministry of Defense decide how the crypto donations are to be spent, though Bornyakov declined to name any specific individuals involved in the process.

“It’s not just one person who decides. Three people have to sign out of the five authorized signatories, and so who makes the decision doesn’t really matter,” Bornyakov said.

Ukraine’s President Volodymyr Zelenskyy, who has emerged as a rallying figure for the country, does not seem to be involved in these purchases.

“We don’t speak to him directly. There is a big structure and there are people who are taking that decision. I don’t know. They are more like a black box to me. I know people who were appointed and who said you have to deal with this guy,” Bornyakov said, refusing to say who “the guy” was.

Ukraine has not revealed a complete list of where the crypto donations are being spent for “security purposes” but Bornyakov has promised to do so in the future.

“Right now we can’t just put a list of what we bought because the enemy is watching,” Bornyakov said.

Bornyakov said that the crypto fund is being used to purchase non-lethal equipment for military purposes such as bulletproof vests, night vision goggles, military-grade food rations and medical equipment that helps with hemostasis such as tourniquets.

Ukraine’s crypto fund has received $60 million, while Ukraine’s national bank has received $280 million to 300 million in fiat currency donations from private parties.

Lobbying the world

Even as Ukraine raises millions in crypto to fight Russia, it has lobbied crypto exchanges to prevent anyone in the aggressor nation from accessing the same services.

Ukraine’s government has asked eight different exchanges to freeze Russian accounts. So far, only some have responded directly, Bornyakov said, though he did not identify these exchanges.

“In general all of them have said they have to be compliant with the sanctions list. But it’s a private business. It’s up to them to stay in Russia or leave Russia, but what everybody agrees on is that if there is a sanction from Europe or Ukraine to specific people then they will block them,” he said.

According to Bornyakov, these exchanges have already blocked accounts of a “couple of thousand people and their relatives who were sanctioned by the U.S or those connected with the Russian government.”

Some exchanges appear to be blocking Russian accounts, but have not responded to the Ukrainian government directly, he said.

“So if you work with Russia even for crypto you basically support the killing of innocent [civilian] people and that’s unacceptable, and if you stand for human values then you have to pull out of Russia,” Bornyakov said.