Cryptocurrency and Terrorism
Author(s): EMAN Staff
Over the past decade, illicit actors, including violent extremists and terrorists, have become increasingly adept at integrating virtual assets, such as cryptocurrencies, into their funding sources. People are attracted to cryptocurrency for a number of reasons, but its advantage for potential malign actors is the ability for one sender to anonymously transfer funds to a receiver regardless instantly and bypass any third-party entity such as a bank. Additionally, digital currencies offer lower transaction fees, compared to real-world assets, and the potential to publicly verify and accept transactions through the blockchain.
In the aftermath of September 11, terrorist financing was given greater attention. Over the past couple of years, many international organisations such as the United Nations and the World Bank have shifted their focus toward the issue of money-laundering and terrorism financing in the emerging digital world as terrorist organisations are taking advantage of crypto assets to raise funds by selling drugs, weapons, and other illegal products in the so-called black market.
According to Middle East Media Research Institute (MEMRI), jihadi organisations are increasingly using social media platforms, especially Telegram, to raise cryptocurrency donations.
Amongst many other terrorist organisations, Daesh has been at the forefront when it comes to generating illicit streams of income to fund its military operations. In 2016, it was revealed that Daesh had created a site on the dark web called ‘Fund the Islamic Struggle without Leaving a Trace’. From its name, the purpose behind the website was to facilitate the transactions of crypto assets to Jihadis in Syria and Iraq. In 2017, a Pakistani New York woman was accused of funding Daesh overseas. The federal prosecutors said that she was laundering bitcoin and other crypto-assets transnationally to support the group.
Another example is Hisham Chaudhary - a British jihadist - who was sentenced to jail in 2021 for using bitcoin to fund Daesh and free supporters of the group from detention camps in Syria. The Counter-Terrorism Policing North East claimed that Chaudhary managed to raise thousands of pounds to back the group. In addition to Islamist radicals, far-right extremists have also sought to take refuge in digital assets due to them being banned by traditional financial institutions. Andrew Anglin, the founder of the U.S.-based far-right, neo-Nazi, anti-Muslim, anti-Semitic and White supremacist commentary and message board website “The Daily Stormer” raised 112 bitcoins from donors and supporters since January 2017. This has skyrocketed his net worth to roughly $6 million.
Despite some banks and leading financial institutions across the world beginning to consider integrating cryptocurrencies and digital assets into their portfolios, which would allow for greater oversight with respect to who owns digital assets, ownership of digital assets remains only on hard wallets that stores cryptocurrencies in a secure offline location — allowing people to cash in their digital assets and hand over physical cash as a donation or support for malign actors and preachers as mentioned above.
Terrorist groups have long posed a danger to the national security of many governments across the world, particularly since September 11. This necessitates long-term international collaboration to eradicate terrorism through addressing unstable socio-economic and political situations and preventing individuals from becoming terrorists. The more straightforward approach to do so is to cut off the terrorist groups' evolving funding streams and techniques.
