Bitcoin becoming choice currency of terrorists

Militants are turning to cryptocurrency to raise funds without alerting authorities

Hamas, the militant Palestinian group, has been designated a terrorist organisation by Western governments and some others and has been locked out of the traditional financial system. But this year, its military wing has developed an increasingly sophisticated campaign to raise money using bitcoin.

In the latest version of the website set up by the wing, known as the Qassam Brigades, every visitor is given a unique bitcoin address where he or she can send the digital currency, a method that makes the donations nearly

impossible for law enforcement to track.

The site, which is available in seven languages and features the brigades’ logo, with a green flag and a machine gun, contains a well-produced video that explains how to acquire and send bitcoin without tipping off authorities.

Terrorists have been slow to join other criminal elements that have been drawn to bitcoin and have used it for everything from drug purchases to money laundering.

But in recent months, government authorities and organisations that track terrorist financing have begun to raise alarms about an uptick in the number of Islamist terrorist organisations experimenting with bitcoin and other digital coins.

MODEST YIELDS

The yields from individual campaigns appear to be modest — in the tens of thousands of dollars. But authorities note that terrorist attacks often require little funding. And the groups’ use of cryptocurrencies appears to be getting more sophisticated.

“You are going to see more of this,” said Yaya Fanusie, a former analyst with the CIA who now does consulting on rogue actors using cryptocurrencies.

“This is going to be a part of the terrorist financing mix, and it is something that people should pay attention to.”

Treasury Secretary Steven Mnuchin has drawn attention to the issue in two speeches in recent months, calling for more active monitoring from cryptocurrency businesses.

“It is still relatively new to them, but I’m confident that we’re going to see more of it in the future,” Sigal Mandelker, the Treasury Department’s undersecretary for terrorism and financial intelligence, said in an interview.

ATTRACTIVE OPTION

Cryptocurrencies are attractive to lawbreakers because they make it possible to hold and transfer money without a central authority, like PayPal, that can shut down accounts and freeze funds.

Anyone in the world can create a bitcoin address and begin receiving digital tokens without even providing a name or address.

The online markets where bitcoin can buy drugs are hosting nearly $1 billion in commerce a year, even as authorities have shut down numerous leading markets.

Countries that are facing US economic sanctions have also taken steps toward creating their own cryptocurrencies to circumvent them.

Hamas, which controls the Palestinian coastal territory of Gaza, has traditionally survived on hundreds of millions of dollars of donations from foreign governments like Qatar. Daesh in Syria subsisted on taxes and fees it collected in the territories it controlled.

But both organisations have seen their access to money significantly curtailed. Israel maintains a strict blockade of Gaza and Daesh has lost most of its territory.

“They seem to be reacting to economic sanctions by saying, ‘We are going to try using bitcoin,’” said Steven Stalinsky, executive director of Middle East Media Research Institute.