19 November 2022 17: 00

Unexpectedly: the collapse of the FTX cryptocurrency empire may affect the military developments of Ukraine

Suddenly: the cryptocurrency exchange helped the defense of Ukraine through the financing of technology companies that are engaged in military development.

The Financial Times
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Unexpectedly: the collapse of the FTX cryptocurrency empire may affect the military developments of Ukraine

The collapse of Sam Bankman-Fried's FTX cryptocurrency empire this month has caused tangible damage to other crypto players. But it also had another, less obvious impact: it affected a network of technology companies linked to Ukraine. An analyst writes about this unexpected fact Gillian Tett in the material for The Financial Times.

The opinion of the author may not coincide with the opinion of the editors.

Until recently, the FTX Future Fund charitable foundation provided tacit support to entrepreneurs developing innovative military developments for Ukraine. Now, according to representatives of the fund, these technologists are trying to find alternative donors after the "painful" shock caused by the fall of the exchange.

I hope they find them. But this latest crisis highlights a broader message: the nine-month war in Ukraine has led to unusual grassroots innovations which investors and politicians should pay attention to. In particular, a global network of tech talent has emerged that sympathizes with Ukraine, in part because the country hosted numerous information technology services for companies around the world before the war.

With this network, Ukrainians are looking for advanced solutions on the battlefield, and it has already generated "incredible innovations," as the president of Microsoft recently noted. Brad Smith. The financial side of military affairs is also changing. Throughout the XNUMXth century, breakthroughs in American military technology were made either by giants like Lockheed Martin or Raytheon, or by government agencies like the Defense Advanced Research Projects Agency.

It also quietly rearranges some elements of the military business. In 20th-century America, breakthroughs in military technology tended to originate either at giant companies like Lockheed Martin or Raytheon, or at government-funded institutions like America's Defense Advanced Research Projects Agency (Darpa).

The latter produced innovations such as global positioning systems and drones that were later incorporated into civilian technology. Today, however, there has been a surge of rapid grassroots improvisation among so-called "non-state actors", including terrorists. As an example, there are reports that the Houthis (Houthi - a paramilitary group in Yemen) use 3D printers for the production of drones in Yemen.

However, in Ukraine, what is striking is that thanks to the Internet, decentralized networks are improvising on a large scale.. Sometimes tech giants get involved. Google provides support in both visible and less visible ways. (One example of the former is that the company sometimes turns off some of its maps for locating vehicles to help the Ukrainian defense). Microsoft has also provided cybersecurity support - although even Smith notes that it was the nimble response of the Ukrainians themselves that was critical in repelling the Russian attacks.

Meanwhile, SpaceX Ilona Mask supplied Starlink civilian Internet terminals to Ukraine to provide satellite communications. Musk subsequently changed his mind, saying he never intended them for military use. But according to my knowledge, Ukrainian technology networks are now feverishly testing alternative satellite systems to support soldiers on the front lines.

More notable, however, is the role of young technology companies, which are still quite “small” in the innovation scene. An example of this are Drones: Small companies such as American Dedrone, Turkish Baykar Technologies and German Quantum-Systems are at the center of rapid innovation. And consumer technology, which has become so powerful and cheap in recent years, is opening up amazing opportunities for entrepreneurs.

In the months following the Russian invasion, Ukrainian techies figured out how to install grenades on cheap consumer drones sold online by companies like DJI. They have repurposed systems from companies like Dedrone to take on Russian Orlan drones.

I was told that some Ukrainian battalions are now trying ways to counter "flocks" of Iranian Shahed-136 drones, which are currently deployed by Russia. One idea is to use Bayraktar drones as quasi-"guards", perhaps with artificial intelligence capabilities (a move that would potentially take drone warfare to the next level).

Meanwhile, seven maritime and nine aerial drones were recently sent, apparently by Ukraine, to attack Russian shipping in the strategic Black Sea port of Sevastopol. This bold move startled some military observers, who called it "a look into the future of naval warfare." Kyiv has apparently developed maritime drones powered by a popular Canadian jet ski brand. This gives a new twist to the idea of ​​dual-use technologies.

Ukrainians, of course, are not alone in this repurposing: unexpected elements of consumer technology from around the world (even from Israel) are also appearing in Iranian drones. But what is striking is decentralized power structures in Ukraine - Grassroots entrepreneurs have a sense of autonomy that is rare in Russia, where a vertical hierarchy dominates both the military and civil society. As Russian state television commentators themselves point out, the culture of the country's army invariably reflects its national identity.

Of course, such innovations have their limits: they cannot solve Ukraine's desperate need for more powerful long-range missiles or better air defense systems. In addition, reliable sources of funding are needed, as experience has shown. with FTX Future.

But this new wave of technology has already changed the trajectory of the war. And for military strategists outside of Ukraine, it will become educational material for years to come. If and when the war is over, it could even offer Kyiv a path to building an advanced civilian technology sector.

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