Digital assets have been used for a long time on dark markets. But now, Bitcoin (BTC) and other assets may take another blow to their reputation, as they are involved in terrorism financing. Now, a pilot study links ISIS activity and financing to the usage of BTC and other crypto assets, based on the research of the MEMRI Jihad and Terrorism Threat Monitor.
The study, titled “The Coming Storm: Terrorists Using Cryptocurrency”, focuses on the shift of terrorists to bitcoin, but potentially to other digital assets.
Until now, the reportedly cash-rich ISIS was using shadow banking and possibly hawala schemes to move funds. But MEMRI has unearthed evidence that jihadists are becoming savvier and using cryptocurrency to transfer funds.
"Cryptocurrency has come to terrorism, with an array of terrorist organizations exploiting the anonymity afforded by blockchain technology for fundraising and finances, yet U.S. counterterrorism officials appear to have been slow to grasp the extent the problem,” writes Steven Stalinsky in the report summary.
The study was released just days after US Secretary of State Mike Pompeo hinted at the threat of terrorism finding ways to finance its activities, potentially through the use of cryptocurrency. But MEMRI discovered messages from various Jihadi leaders, encouraging the usage of digital coins. Intercepted chatter and messages also support the evidence that a shift to cryptocurrency is happening right now.
Messages are being sent on all social media, but key communications are happening on Telegram, the encrypted messaging service preferred by hackers and now, terrorists. Communication analysis reveals that pro-crypto messages from terrorists are originating with the supporters of Al-Qassam Brigades, the military wing of Hamas.
Stalinsky has pointed out that even mainstream assets like Telegram’s TON and GRAM coins could end up being used by terrorists, as well as Facebook’s Libra, if launched. Cryptocurrency is an important tool for fundraising. The MEMRI report points to the creation of platforms and fundraising pages, where equipment and weapons purchases for jihadists could be supported through cryptocurrency.
The crypto sector has already tightened its rules on anonymous trading, but there are still enough ways to liquidate digital coins. But even if not sold, crypto assets may be facilitating a new terrorism marketplace. While cryptocurrencies are not entirely untraceable, they are also more difficult to track compared to traditional money transfers.
