Ukraine cancels Crypto ‘Airdrop' rewards for donations to help fight Russia

Ukraine has scrapped a plan to reward people who donated to its fight against a Russian invasion with newly created crypto assets, following complications with the project.

People gather outside the temporary accommodation centre after fleeing Russian invasion of Ukraine, in Korczowa, Poland. (REUTERS)

Ukraine has scrapped a plan to reward people who donated to its fight against a Russian invasion with newly created crypto assets, following complications with the project. The official verified Twitter account for Ukraine said on Wednesday it planned to issue a so-called “airdrop”, a common tool for early-stage crypto platforms to attract users by offering free tokens to jump start a project. But a day later, Ukraine's Vice Prime Minister Mykhailo Federov said in a tweet that the nation had decided to cancel the project. The tweet wasn't independently verified by Bloomberg News. 

“Every day there are more and more people willing to help Ukraine to fight back the aggression,” Federov said in a tweet from his personal verified Twitter account on Thursday. He added that Ukraine will announce a drop of nonfungible tokens to support the Ukrainian Armed Forces soon, but that it has no plans to issue any fungible tokens such as cryptocurrencies.

The project's cancellation followed rife speculation that Ukraine had begun its airdrop hours ahead of schedule on Thursday, after a tracker of its Ethereum wallet showed the creation of 7 billion newly-minted tokens and transactions distributing those tokens to individual addresses. Analysts at crypto research platform and news service The Block later suggested the transactions had been spoofed by an outside third party.

Airdrops have been previously utilized by companies and some governments to boost mass adoption beyond the private sector. El Salvador last year rewarded its citizens with $30 in Bitcoin as an incentive for adopting its state-sponsored Chivo wallet. The move was part of the country's adoption of Bitcoin as legal tender, a process which has been beset by controversy. 

Crypto addresses affiliated with the Ukrainian government and various charitable organizations had received more than $33 million in cryptocurrency donations as of Wednesday, according to data compiled by Bloomberg.