P Xenos and M Bacina
Traceable terrorism financing using digital currency leads US DoJ prosecution
The US Department of Justice (DOJ) says it has dismantled three online fundraising campaigns involving terrorist organizations, including Al Qaeda, ISIS, and the al-Qassam Brigades (Hamas’ military wing).
In doing so, the DOJ seized millions of dollars in digital currency that was intended to fund the groups. It was hailed by the DOJ as “the government’s largest-ever seizure of cryptocurrency in the terrorism context.” The total amount seized is not yet disclosed.
US officials have also seized over 300 digital currency accounts, four websites, and four Facebook pages that were related to the campaigns.
The Secretary of the Treasury, Steven Mnuchin, said in a statement:
Terrorist networks have adapted to technology, conducting complex financial transactions in the digital world, including through cryptocurrencies.
The groups appear to have conducted these campaigns primarily on the internet, using a variety of platforms and tactics. The al-Qassam Brigades’ campaign involved calls for Bitcoin donations posted on its social media page and its own websites.
The group also posted instructional videos claiming Bitcoin donations would be untraceable with a unique bitcoin address.
Official website of the al-Qassam brigade campaign
Al Qaeda and other affiliated terrorist groups solicited Bitcoin donations through Telegram and other social media channels, in some case, purporting to be charities. These groups used multi-layered transactions to attempt to obfuscate the movement of these donations to a central hub of addresses, from which funds were to be redistributed to the individual groups.
While multiple groups ran their own individual donation pushes, nearly all of them followed a similar strategy. The groups presented themselves as charitable organizations operating in Syria and solicited Bitcoin donations on social media and messaging platforms. However, despite this facade, these groups often published posts indicating that donations would go towards purchasing weapons for militant groups.
The DoJ claims an ISIS facilitator named Murat Cakar also laundered funds for the organization through a website called FaceMaskCenter.com that claimed to sell personal protective equipment, including N95 masks, when in fact the items were not FDA approved.
Don Fort, head of IRS criminal investigation cyber crimes unit said:
[Our] ability to trace funds used by terrorist groups to their source and dismantle these radical group’s communication and financial networks directly prevents them from wreaking havoc throughout the world
The operation was a collaboration between a number of US agencies including the IRS, the Department of Homeland Security, the FBI, and the DC US Attorney’s Office.
Chainalysis tools aided in the investigation, which displays that an analysis and increased focus on blockchain develop will assist fundamentally in the investigation into the donation campaigns that terrorist groups conduct on social media, as well as come to grip with the larger underlying financial networks that facilitate their operations.