The US foundation for defense of Democracies (FDD) center of sanctions and illicit finance shows that crypto-currencies are ill-suited for financing terrorist groups as has been earlier alleged by various regulatory bodies. While delivering the report during his speech at the US House of Representatives subcommittee on terrorism and illicit finance, CSIF director Yaya Fanusie, considered several cases where terrorist groups had used crypto to raise funds.
The report mentioned the “first terrorism” funding campaign which was dubbed “Jahezona” done in 2016 at the Gaza strip which was publicly visible on the blockchain. The campaign to raise funds was spearheaded by a group of jihadists who go by the name “Mujahideen Shura Council” and aimed to raise approximately 2500 dollars per fighter with an option to pay in Bitcoin (BTC). According to reports, the terrorist group raised about 500 dollars in Bitcoin.
The decentralized nature of crypto-currencies makes the users pseudo anonymous transactions available for public viewing hard to skirt by terrorists. Fanusie further stated that by analyzing Jahezona’s transactions, the CSIF was able to identify the exchange through which the terrorist groups transaction was done. That exchange was none other than the defunct BTC-e exchange which had been known for allegedly facilitating money laundering. The exchange was disrupted exactly for this reason. Another example looked at militant groups in Syria called “Malhama tactical” which sought to raise money on twitter.
The group founder was a citizen of Uzbekistan who once served in the Russian military before joining rebels in Syria back in 2013. The terrorist financing campaign realized a 100 dollars’ worth of Bitcoin. Fanusie explained that these groups only amassed small amounts since managing large amounts of cryptocurrency required specific skills such as being extremely savvy in cyber security which is uncommon with most terrorist groups. He added that crypto’s volatility, as well as its vulnerability to scammers and hackers, made it less likely to be a favorite fundraising avenue for global jihadists.
Fanusie further pointed out that lawmakers recognize cryptos as just a payment method for illicit activities while terrorists use locations that are currently not conducive to the use of crypto-currencies. Terrorists mostly have to buy things using hard cash which is almost impossible to trace due to a lack of basic crypto resources and infrastructure. He stated that the reservations and challenges that the general public has in using crypto are the same ones faced by terrorists. He finally stated that crypto-currencies are not innately fraudulent like some people may like to believe. They can be utilized for good or evil like other technological innovations.
