At the recently concluded National Security Strategies Conference 2022, presided over by Union Home Minister Amit Shah intense deliberations were held on existing and emerging security challenges; one of the moot topics was cryptocurrency and its potential threat to India’s national security.
According to the Cipher Trace ‘Cryptocurrency Crime and Anti-Money Laundering Report, February 2021: Criminally associated bitcoin addresses sent over USD 3.5 billion worth of bitcoin in 2020. This figure includes BTC addresses controlled by dark markets, ransomware actors, hackers, and fraudsters. Most of this bitcoin will ultimately need to be laundered by these criminals, meaning it will make its way to an exchange where it can be converted to fiat currency and transferred to a bank.
Terrorist organizations and their supporters and sympathizers are continuously looking for new ways to raise and transfer funds without detection or tracking by law enforcement. An asset like cryptocurrency, which allows for the instant, pseudonymized transmission of value around the world with no due diligence or recordkeeping, was bound to catch their eye.
On August 13, 2021, the U.S. Department of Justice announced the seizure of USD 2 million in cryptocurrency from prominent terrorist groups, including al-Qaeda, ISIS, and Hamas. The funds came from cryptocurrency donations the groups solicited online via social media and their own websites. US Department of Justice in its recent report highlighted about the Hamas using bitcoin donations via a Telegram channel run by its military wing, known as the Qassam Brigades.
Two years ago on 30, 2020, French law enforcement arrested 29 French operatives linked to a terrorism financing operation which used cryptocurrency “coupons” in an attempt to obfuscate the source and flow of funds. The French operatives are believed to be affiliated with the Hayat Tahrir Al-Sham organization, an Al-Qaeda affiliate. Reportedly, the French operatives purchased thousands of euros worth of cryptocurrency coupons from licensed tobacco outlets in France and sent the credentials on the coupons to jihadists in Syria, where the Bitcoin could be redeemed online.
France’s financial intelligence unit, Tracfin, was able to detect the financial flows from France to Syria after constant surveillance of the group led authorities to several dozen people living in France that had been visited repeatedly, over the past few months, tobacco shops throughout the country to anonymously purchase coupons worth between Euro 10 and Euro 150, that were then credited to accounts opened from abroad by jihadists. This was revealed to the media by the national anti-terrorism prosecutor’s office.
It should not come as surprise to people reading this articles that terrorist organisations cryptocurrency to trade drugs, weapons, and other items on the black market. The ‘Fund the Islamic Struggle without Leaving a Track is a website on the darknet that is used to transfer bitcoins to Islamic terrorists.
In the summer of 2014, an article titled, “Bitcoin wa Sadaqat al-Jihad” was published in an online blog. The article promotes the use of Bitcoin virtual currency as a means of limiting economic support for infidels and circumventing the Western banking system, which limits donations for jihad through restrictions on the financial system. The article recommends using Bitcoin digital currency for ideological-religious reasons as well as for its technological characteristics, and insists on the advantages of the system that enables the issuing of this currency. These advantages include prevention of counterfeiting, it is anonymous and untraceable, it is not subject to legislation and it has global distribution. Bitcoin is transferred from one user to another without systemic intercession, such as eBay or PayPal, while relying on a decentralized system; it does not have security weaknesses and cannot be hacked. By using this digital currency, one can prevent his ‘brothers’ who live outside the borders of the Caliphate from having to pay taxes to the infidels while simultaneously financing the mujahideen without exposing them to any legal risk
In June 2015, the European Union published a report according to which supporters of terrorism allegedly transfer private donations using Bitcoin. The report stated that, according to the head of the US Cyber Command, activities by the Islamic State on the dark web will expand the organization’s ability to strengthen itself economically and to improve the efficiency of its physical operations.
In a report published by the International Institute for Counter Terrorism titled ‘Jihadists’ Use of Virtual Currency’ it revealed several cases of cryptocurrency used in terror financing:
In January 2017, it was reported that Bahrun Naim, an Indonesian resident of Syria, was suspected of involvement in Islamic State operations, including assisting and coordinating attacks in his country of origin and financing terrorism through Bitcoin and PayPal. Naim is considered to have been involved in the terrorist attacks in Jakarta in January 2016, which claimed the lives of four civilians.
The Akhbar al-Muslimin website, which publishes news from the Islamic State, launched an online fundraising campaign in November 2017. The site’s operators attached a link to each published news report encouraging donations using Bitcoin virtual currency for the purpose of operating the site, provided that the donation did not come from zakat funds. A study that was published by the Meir Amit Intelligence and Terrorism Information Center at the beginning of December, found that clicking on the link led to a dedicated donations page on a Bitcoin trading site called CoinGate.15 An independent examination that was carried out by the Cyber-Desk of the International Institute for Counter-Terrorism (ICT) on January 16, 2018, found that the link no longer directs to CoinGate. Instead, the link redirects to an internal page on the site that was created on December 7, 2017 and every click on the site provides a different Bitcoin address. An attempt to re-test it was carried out on January 17, 2018 but was not completed because the web site removed or taken down.
The Haq website, which is associated with the Islamic State, published an article in December 2017 about the online sale of coins minted by the Islamic State.16 In the summer of 2014, the Islamic State declared the minting of local coins based on their intrinsic value — gold, silver and copper. The launch of the new coin was published in Dabiq magazine and in a propaganda, video titled, “Return of the Gold Dinar” (Al Hayat). These publications explained that the initiative is intended to keep Islamic State supporters from using the Western banking system, which is based on non-precious metals and is printed on paper notes, and whose value is manipulated by the central banks. The fall of the Islamic State made the coins unnecessary for conventional use as local money in the territory of the Caliphate, and they are apparently being sold and exchanged as collectors’ items. The Cyber-Desk of the International Institute for Counter-Terrorism (ICT) located a website named “isis.coins.com” on which these coins are sold. The site is presented as an official site of the Islamic State’s Ministry of Finance containing the coins minted by the Islamic State, in accordance with the specifications described in the film, “Return of the Gold Dinar”. Sets of seven coins are offered for sale on the site: two gold coins, three silver coins and two copper coins, at a cost of USD 950 per set, to be paid for using Bitcoin virtual currency. The site was registered on the WHOIS registry on October 19, 2017 through a Russian (Moscow) brokerage firm that prevents the identification of the site’s owners.
The use of Bitcoin and other cryptocurrencies to fund Islamic terrorism, and cryptocurrency has become an alternative to the mainstream financial system and legal tender. Union Home Minister Amit Shah having intense deliberations on cryptocurrency at the National Security Strategies Conference 2022 is an indication that India is looking at cryptocurrency cautiously and keeping an eye on its terror-financing usage and links.
