How Cryptocurrency is Funding Ukraine's Battle for Itself and the Soul of Democracy

Audio-Only Podcast

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David Berlind's Interview with Open Dialogue Foundation President Lyudmyla Kozlovska

David Berlind: I'm David Berlind with the Blockchain Journal podcast. I'm coming to you from the DC Blockchain Summit 2023 taking place in Washington, D.C., of course. We're surrounded by lawmakers, regulators, lobbyists, [and] people who are really looking into the idea of where cryptocurrency and blockchain regulation is going in the future because until some decisions are made, a lot of organizations are kind of stuck. They don't know what to do, they don't know how to anticipate which direction the regulations will head, and how to respond to that with their strategies. Now, this event draws people from all over the world, and standing with me is Lyudmyla Kozlovska.

And Lyudmyla, you are not a lobbyist, you're not a regulator or a lawmaker, but you're from somewhere else. Where else are you from?

Lyudmyla Kozlovska: I'm [a] human right[s] defender from Ukraine, and I actually deliver humanitarian aid and protect human rights with the use of crypto assets like Bitcoin and stablecoins. I'm the leader and founder of Open Dialog Foundation, and since the first hours of [the] Russian invasion to Ukraine, we were capable to fundraise and then, [on] the second day of the war, deliver humanitarian aid, together with [the] Minister of Defense and Embassy of Ukraine in Poland, to [the] Ukrainian Minister of Defense in Ukraine, with hundreds of sets of medical equipment, hundreds of protective equipment, like bulletproof vests, helmets, just because of [the] speed of Bitcoin and crypto assets.

Well, you cannot use traditional financial instruments in even fundraising campaigns because it's considered by anti-money laundering and counter-terrorism regulation as a[n] activity associated with the military zone. So you basically deprive the right to fundraise to support Ukraine at the early stage, and even now, a lot of Ukrainian organization volunteers, they, unfortunately, deprive [of] the right to have this kind of fundraising campaigns, and thanks to Bitcoin and stablecoins, we're capable to do so, we're capable to save lives. And this is also the reason why [the] Ukrainian government actually also using crypto assets, particularly Bitcoin and sell Bitcoins, to basically buy or to basically transfer as fast as possible the important protective equipment and even weapon[s] to Ukraine thanks to these payment instruments.

Berlind: Now, what surprises me about the people of Ukraine, people like yourself, people like Yulia Parkhomenko, who I interviewed in Davos, Max Lurya. These folks, they live in Ukraine, but they find a way to get out to the world, [and] show the world that they're still doing what they do, whatever it is they may be doing. Yulia, for example, works in the Ministry of Digital Transformation there, continues to do her job, fly around the world, and go to the most important events. Here you are, you're from Ukraine; it's probably not the safest thing to travel out of Ukraine to get here, but you and your fellow country people are out and about in the world telling the Ukraine story. That's almost as important as any sort of fundraising or cryptocurrency that you might be taking, just getting this message out, being an ambassador for the country.

Kozlovska: Yes, exactly. So you need to understand that while we, from one side, [are] extremely, extremely grateful particularly for Bitcoin and crypto, basically, holders because they helped us and came immediately the first hours of Russian invasion to Ukraine, while the traditional financial institutions and basically traditional fiat money came to us into months later. So these first months were crucial for Ukrainians, and this is the reason why a lot of Ukrainians and also [the] Ukrainian government is really, really grateful, grateful for everyone from [the] crypto community. This is the first point.

The second point, we as Ukrainians, we're not defending only our land. We defend the general democracy in the world, because if Putin's allowed to commit war crimes in Ukraine, and he's before committed war crimes in Moldova, in Georgia, in Kazakhstan, they will do it on Europe [as a] whole and not only in Europe. So in fact, we defend the whole principles of democracy. And of course, for us, [it is] extremely important that we, as Ukrainian voices, whenever we are in Brussels, in Washington, in Kiyv, or whenever we are, we're defending all of our principles. And of course, solidarity, it means a lot for us. It's not just words, it's our lives.

Berlind: Yeah. Well, that's amazing that you guys get out. Now, do you know, by any chance, since the beginning of the war, how much in cryptocurrency has been raised? Maybe you can translate it into US dollars? What's the total amount raised since the beginning?

Kozlovska: Over 170 million of dollars were at least transferred. I mean, it was donated first to Ukraine and then used also to buy protective equipment. We don't know how much use the government itself for transaction[s], but officially, information in donations, it was actually over 170 million of dollars.

Berlind: And what specific role does your organization, the Open Dialogue Foundation play? Because I just love the name, Open Dialogue Foundation. It sounds like it's not just about supporting Ukraine and maybe it sounds more like it's about the dialogue of democracy.

Kozlovska: Yes, exactly. So as a human rights organization, we work with [the] post-Soviet region. It's Russia, Ukraine, Kazakhstan, [and] Moldova. It's our particular focus, but we also work with instruments, international instruments, which, unfortunately, [are] abused as a transnational tool for repression, like principle, like mutual legal assistant request, and also anti-money laundering regulations. And what we basically discovered, that in [the] case of Ukraine, we see this kind of abuses for so-called false-positive, which was discussed here also in the house during this conference. When clients of [the] traditional financial system, they refuse to have a bank account of financial services just because they fundraise, for example, for so-called unsafe territories like Ukraine. So our role, it's to highlight these kind[s] of questions with regulators and to find remedies [for] how the people who use [the] traditional financial system and crypto assets can be back not to be in a gray zone. This is the first thing.

The second thing, we as Open Dialogue Foundation work extensively since the first hours of [the] Russian invasion to Ukraine to provide relocation rescue support for refugees from Ukraine, [and] also from Belarus. In Poland, we have a biggest hub to support militaries and also individuals with the humanitarian aid, and all we [are] doing in fundraising is basically cryptocurrencies. Why? Because at some point, our foundation, because of our human rights activities in the past, [inaudible 00:06:47] attack[ed] at least three states, and we were deprived to have [the] right for traditional banking. This is the reason why we were so aware [of] how you can use crypto assets. This is a reason why we also advised for Ukrainian government representatives [on] how they can use also crypto assets for fundraising, especially in this kind of emergency situation.

And now, we created a coalition of NGOs who, unfortunately, became a victim of this transnational tools of repression, like anti-money laundering, [and] counter-terrorism regulation. We're doing advocacy. We explain it, as end users, how we use Bitcoin and stablecoins to deliver humanitarian aid, protect human rights, and why we want to be back to [the] traditional financial system, benefit from its all services, and not be deprived also the right to use crypto assets where, for example, you cannot use this traditional financial system. For example, in Russia, in Belarus, or, for example, in Kazakhstan [and] Uzbekistan, if you just try to fundraise in [the] traditional financial system, you would be assumed as extremists if you protect human rights, if you criticize the government, if you go to, for example, support Ukraine.

But at the same time, you can, for example, in Russia, of course, and in Kazakhstan and Uzbekistan, recruit people to fight against Ukraine, for Wagner and no one is going to prosecute you. So we expose these kind[s] of illicit activities. We expose how third countries like Kazakhstan, Uzbekistan, [and] Turkey help Russia to evade, [and] circumvent sanctions, regime, and we want to make it more effective but not try to kind of easy explanation that it's, "Oh, Russia is using crypto assets to evade sanctions." It's not true. They use central banks... It's like state agencies of third countries, [and] partner countries to avoid for billions of euros and dollars sanctions, and we, of course, expose all these illicit activities.

Berlind: Now, here in the US, things are kind of at loggerheads in terms of regulations. Regulations are very slow to come out and it is slowing down the adoption of cryptocurrencies, Bitcoin, et cetera. Is that a problem in terms of raising money? If there's a lot of regulation and there's an obstacle to people working with cryptocurrency, does that become an obstacle to you to raise the money?

Kozlovska: Yes, of course. So no one wants to be associated with something which is forbidden. So our role, because we know the value, we know how really these important instruments, like crypto assets, can save lives, especially with authoritarian regimes. For you maybe, I mean for many European[s], for many American[s], you have a privilege to live in a secure world where you use crypto assets for speculation. For us, it's saving lives. It's the only tool how you can safely defending [the] privacy of donors, defending [the] privacy of those who are recipients to deliver humanitarian aid. It's the only hope for [the] family of political prisoners how they can securely receive some small aid. It's not about big money, it's about 50 sometimes dollars, but for them, it's like life...

Berlind: Or death?

Lyudmyla Kozlovska: Exactly. Life or death.

Berlind: Okay. Now, it sounds like you're doing a world of good. You're roaming around the world, you're raising money, you're telling people about the importance of cryptocurrency in the role of preserving democracy, let alone Ukraine's sovereignty, but you also have been stopped and prevented from traveling yourself, haven't you?

Lyudmyla Kozlovska: Exactly, exactly. This is story [of] what I said to you, that I was persecuted harshly. I'm still being persecuted, but I won [a] historical court decision against Deputy Minister of Special Services of Poland, who used all fake news produced by Kazakhstani, Moldovan, I mean Plahotniuc regimes, and others, dictators against me because... I mean, Poland, unfortunately, we have at this stage that the Polish government violates rule of law, human rights, women['s] rights, and we, as [an] organization, were the first who exposed it on [an] international platform. So to seize of activity, human rights activity, [the] Polish government used me as a[n] easy target, as Ukrainian, and they thought that if they place me politically-motivated in a Schengen Information System list like a threat to national security, it would solve for them problems. But it was not easy. I know how to protect hundreds of political prisoners and those who are politically prosecuted, and of course, I was capable to protect myself. So I initiated the reform of Schengen Information System. I initiated again this reform of anti-money laundering regulation abuses when it's abused by such people, like dictators or authoritarian regimes, like in Poland.

And now we have, for example, special... I mean, special because it's first time when [a] foreigner win[s] the decision of the court against [the] Deputy Minister of Special Services when you accuse in money laundering, in threat to national security, being a Russian spy, all possible fake news. But normally, judges are afraid to take decision, especially on a course of foreigners, but we were so vocal, we were so exposing all of these irregularities that we won. And of course, it's really important because it gives remedy for other foreigners who was the same like me, deprived [of] their right, but they didn't have the courage, they didn't know how to defend their rights.

And I'm really proud to say that for now, we have a special also motion for resolution and, afterwards, report of [the] Parliamentary Assembly of the Council of Europe, which explicitly writes how you have rights to, with remedies, with compensation, access to information for foreigners. You don't have it in [the] US, you don't have it in [the] UK, in Canada, in any democratic countries, but you have it already in 27 countries of [the] European Union, and everyone who is supporting Schengen Information System, and I think it's revolutionary.

So we're here to show [an] example that you can support, you can defend your rights even if you are a victim of repression, and I think it's an important example.

Berlind: Okay, well, Lyudmyla, amazing story. I can't imagine what it must be like to live a day in your life when you're there in the Ukraine, and I know I'm speaking for everybody who's watching this. We wish you all of the best in terms of your health and your safety, and we certainly look forward to Ukraine, one day, declaring freedom from Russia.

Kozlovska: Absolutely. Thank you so much, and thank you, everyone, who supports Ukraine. We need your help. We always thank you for saving our lives. Thank you. Thank you.