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ISIS Millions Could Be Hidden in Cryptocurrency Ready-to-Fund War Chest

Experts have disclosed that ISIS is using crypto platforms to conceal donations and bypass financial security measures. Experts have made such a revelation after identifying an increase in advertising for donations.

The ISIS (Islamic State of Iraq And Syria) has been recognized as the world’s richest terror group. Governments across the world are aware of the terror group and actively looking to block and track all funding efforts through banking channels. However, such difficulties have not stopped ISIS from using other ways to bypass money-laundering filters and sanctions. The group is using cryptocurrencies as it looks for untraceable and anonymous ways to transfer money.

Terrorists Think Cryptocurrency Is the Perfect Hiding Place

According to the latest report, experts fear the terror group’s missing £246 million war chest could have been transferred into cryptocurrency in an attempt to hide it from the authorities.

In the previous year, ISIS used crypto to fund the Easter Sunday terror attack in Sri Lank that left at least 250 people dead after suicide bombers targeted four hotels and three churches in quick succession.

Hans-Jakob Schindler, director of CEP (the Counter Extremism Project, a specialist think tank tracking the trend of terrorism financing), revealed that since 2017, the authorities have been searching for the terror group’s mission war chest and it is feared that it may have been converted into cryptocurrency to be used at a later date.

Schindler stated: “I’m wondering if from 2017-2020 there has been $300m that we have not found and that’s why I’m thinking this might have been one of the ways it might have been used.”

“This would be an ideal storage mechanism until it is needed. If done right it would be unfindable and unseizable for most governments.” He said.

ISIS is considered to be the first terror group to face prosecution in court for crypto activities.

Ali Shukri, a US teenager, was put in prison for 11 years in 2015 for providing an online manual to ISIS supporters on how to use Bitcoin to conceal financial donations.

Schindler mentioned that there have been consistent cases of Hamas and ISIS using cryptocurrencies since 2014. From these early days of cryptocurrency, ISIS has been interested in what could be done with the new technology. Due to the anonymity of the user, when digital transactions are broken up into small transactions, it is next to impossible for the terror group to be traced back to a particular entity.

Schindler is urging the EU governments to work together to develop a regulatory framework to build tighter regulations.

Yaya Fanusie, a director at the Foundation for the Defense of Democracies, has been studying terror groups using crypto since 2016 and first saw an increase in advertisements for crypto donations in crowdfunding sites. He identified supporters of ISIS increasingly rely on the sophistication of blockchain technology to generate funds for the terror groups. Rather than one blockchain address, there are multiple addresses, which make it difficult for law enforcers to track. He said that the terror group is using software that supporters can download and, therefore, they don’t have to go through a crypto exchange.

In the previous year, a report by US security group, the NSRD (National Security Research Division) urged for international cooperation between the intelligence community and law enforcement in dealing with the issue. The US security group said that the high adoption and use of these technologies are critical uncertainties, which have significant operational impacts.

This analysis suggests that oversight and regulation of cryptocurrencies, together with international cooperation between the intelligence community and law enforcement, would be vital steps to prevent terrorist groups from using crypto to support their activities.

Terrorist Groups Use Telegram for Raising Cryptocurrencies

Last year in August, MEMRI (the Middle East Media Research Institute), a Washington-based nonprofit research organization, issued a new report indicating that social media has demonstrated to be fertile ground for soliciting funds used in terror financing. Terrorist groups like Hamas, Al-Qaeda, and ISIS are increasingly using social media sites to raise cryptocurrency. Donors may not even know that they are giving their money to fund conflicts. Encrypted messaging app Telegram is identified as the most preferred app by these terror groups. The terrorist groups regularly publish their Bitcoin addresses when they seek donations on social media sites like Twitter, Telegram, Facebook, and others. They also share detailed instructions via these sites to explain how potential donors can donate in cryptocurrencies. MEMRI mentioned that it has been in touch with the US government and other western government agencies to inform them about their findings. Pavel Durov, Telegram’s CEO, obtained letters from the US Congress to take immediate action against the evidence provided of terrorist groups using his platform.

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ISIS Is Not Hoarding $300M in Bitcoin War-Chest, Reports Chainalysis

Over the past week, the comments of a counter-terrorism think tank Director have indicated that ISIS has been using cryptocurrency platforms to conceal donations and bypass financial security measures and could be hoarding close to 300 million in Bitcoin.

The think tank expert initially made the revelation after identifying an increase in advertising for BTC donations. However, a recent report from Chainalysis suggests that there is no evidence of ISIS’s $300 million BTC war-chest and they are not impressed with the mainstream media’s conflation of the Director’s comments.

The articles reporting the supposed war-chest took their lead from the comments of Hans-Jakob Schindler, Director of the CEP (the Counter Extremism Project, a specialist think tank tracking the trend of terrorism financing), who revealed that since 2017, the authorities have been searching for the terror group’s mission war chest and it is feared that it may have been converted into cryptocurrency to be used at a later date.

Schindler said, “I’m wondering if from 2017-2020 there has been $300M that we have not found and that’s why I’m thinking this might have been one of the ways it might have been used.”

The thought of a notorious extremist group like ISIS being funded by anonymous crypto and Bitcoin fits right into many people’s conceptions of the main use for digital assets: to fund terror and buy contraband.

However, as Chainalysis has revealed in a recent report, there just is no evidence beyond Schindler’s guesstimation and there is no evidence among his think tanks research either to make the $300 million BTC war chest claim. In fact, there is nothing really to suggest that ISIS has any bitcoin at all.

Chainalysis Busts ISIS BTC War-Chest Myth

As mainstream media headlines blew up with the sensation ISIS crypto-fund story, Chainalysis decided to publish a fact-checking blog on May 20, accusing the media of sensationalizing out of context comments.

The report reads, “This week, stories circulated that Hans-Jakob Schindler, director of the think tank the Counter Extremism Project, said that authorities have searched for ISIS’s missing war chest since 2017 and that he is wondering if the $300 million has not been found because cryptocurrency “might have been one of the ways it might have been used… This would be an ideal storage mechanism until it is needed. If done right, it would be unfindable and unseizable for most governments.”

According to the analysis firm, most of the terror financing ever conducted via bitcoin has never even raised more than $10,000.

Chainalysis asserts, “Schindler’s theory is highly unlikely,” further explaining that if ISIS had funneled oil proceeds into Bitcoin, “trading volume of regional exchanges and money service businesses would have reflected this flow of funds.”

Furthermore, contrary to popular belief, cryptocurrency and Bitcoin are not necessarily the ideal storage mechanisms for illicit funds. While digital assets have a reputation for being untraceable, in comparison to cash they are “inherently transparent”, every transaction is recorded and publicly visible in the decentralized ledger.

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US Government Seize Bitcoin Terrorism Funding for Islamic State and Al-Qaeda

The US Justice Department has revealed that it has seized Bitcoin and cryptocurrency worth millions of dollars intended to fund the activities of terror groups like the military arm of Hamas, the Islamic State, and Al-Qaeda. This breakthrough is the largest clampdown on online terrorist fundraising, according to The Washington Post.

300 cryptocurrency accounts scrutinized

Apart from the captured funds, the US officials also disclosed that they had attained court orders to get hold of 300 cryptocurrency accounts, four Facebook pages, and four websites linked to the alleged terror fundraising.

They also noted that Al-Qaeda groups mainly in Syria were to be financed using laundered Bitcoin. The funding organizations in question solicited Bitcoin donations using social media platforms like Telegram.

According to the US government’s court filing, the appeal for donations was at times disguised as charity work if the message didn’t sink in that the money was to be used to purchase weapons.

Quest for Bitcoin donations

The US authorities noted that they thoroughly investigated the military wing of Hamas called Al-Qassam Brigades after it posted a request for Bitcoin donations on its social media page as they were untraceable and could be channeled for violent causes. They were able to lay hold of 150 accounts linked to this fundraising effort.

Steven T. Mnuchin, the Treasury Secretary, noted:

“Terrorist networks have adapted to technology, conducting complex financial transactions in the digital world, including through cryptocurrencies.”

In another case, Murat Cakar was charged for being an orchestrator of the Islamic State. He was the mastermind of a coronavirus-related scam, which coerced victims that it was selling protective masks.

In May, blockchain analysis company Chainalysis indicated that ISIS was not hoarding $300 million Bitcoin war-chest. This revelation came in the wake of allegations that this terror group using crypto platforms to bypass financial security measures and conceal donations.

UK ISIS Member Charged for Sending Bitcoin to Terrorist Militants in Syria

A UK member of ISIS faces multiple charges for sending funds using Bitcoin (BTC) to aid the escape of terrorist militants being held in prison camps in Syria.

On October 29, a 27 years-old British citizen appeared before the Westminster Magistrate court on allegations that he used Bitcoin cryptocurrency to send funds to help captured ISIS militants escape prison camps in northern Syria.

According to the court documents, Hisham Chaudhary has been a member of the ISIS (Islamic State of Iraq And Syria) for more than four years, assisting the terror group in executing its operations.

Some of his roles within the terrorist organization involved gathering and transferring funds abroad using Bitcoin to help captured terrorists to escape from prison camps controlled by Kurdish forces in northern Syria.

The court documents allege that Chaudhary acquired and sent undisclosed amounts of Bitcoins to facilitate hidden transactions and operations of the militants in the prison camps. Furthermore, the court documents also indicate that Chaudhary participated in compiling and distributing a terrorist publication recognized as “The Wholesome Fruit in The Virtues and Etiquettes of Jihad” during late last year. Chaudhary is also accused of disseminating videos on a Twitter account and using Telegram online messaging app.

Chaudhary appeared before the Westminster court by video-link from a police station, wearing a face mask and covering his shoulders with a blanket.

The judge mentioned that Chaudhary joined the group in January 2016 and remained an active part of the militant terror networks through October 2020. Despite terror organizations banned under the UK law in 2014, Chaudhary helped the group to fulfil the execution of its terrorist operations.

The court charged him with seven violations, including membership of and association with an identified terrorist organization, disseminating information about a terrorist publication, and participating in funding activities to finance terror group. However, Chaudhary did not take a plea to the seven charges levelled against him during the brief hearing.

He was remanded in custody and will appear before the court next Friday.

The culprit was arrested after an investigation launched by Leicestershire Police, Counter Terrorism Policing East Midlands, and Counter-Terrorism Policing North East.