Articles

Terrorism and Crypto: Evidence from Ex-CIA Analyst

October 19, 2019


Hi everyone! My name is Giovanni and today
we are going to take a deep dive into the
darkest corners of the blockchain. As with
all innovative technologies, cryptocurrencies
have the potential to change the world for
the better, but at the same time they can
be used to facilitate criminal enterprises,
such as money laundering schemes, drug trafficking
and even terrorism.
Terrorist groups have been interested in crypto
because it enables almost instant transfers
of money across borders without the oversight
of a central authority. Since terrorists are
locked out of the traditional financial system,
they have been testing Bitcoin as an alternative
way to fund their activities.
But how successful were these attempts? Are
cryptocurrencies really a sustainable source
of funding for terrorists? And what can the
crypto industry and law enforcement agencies
do about it? Let’s have a look at some concrete
scenarios.
One of the earliest documented cases dates
back to 2016, when a pro-Islamic State organization
called Ibn Taymiyyah Media Center started
asking for donations in Bitcoin on social
media. The goal of the fundraising campaign
was to raise $2,500 dollars for each of their fighters.
Unfortunately for the terrorists, they made
a big mistake.
Contrary to what they might have thought,
Bitcoin is not fully anonymous. Every transaction
leaves a trace on the blockchain, and by publishing
their Bitcoin address on social media, the
terrorists made it easy for investigators
to trace funds moving in and out from that
address. Which is probably why within two
years the fundraising campaign reportedly
collected only $2,500 dollars in total.
As pointed out by RAND, a US think tank focused
on national security, there are three aspects
to take into account when talking about terrorism
financing: receipt, management and spending.
So far, crypto gives a real advantage only
for the first; terrorists can receive an unlimited
amount of money from everywhere in the world
by accepting Bitcoin. However, once they’ve
received their Bitcoin, they are likely to
have a hard time managing and spending those
funds anonymously.
I mean, you can’t exactly buy a missile
with Bitcoin yet, so in order to purchase
weapons and other equipment terrorists need
to cash out.
This means they need to rely on some sort
of centralized infrastructures such as cryptocurrency
exchanges, many of which scrutinize their
users and can shut down suspicious accounts.
But how exactly is it possible to track terrorism-related
funds on the blockchain? To answer this question,
we reached out to Itsik Levy, CEO at Whitestream,
an intelligence company based in Israel, specialized
in extracting information from the blockchain
traffic.
Itsik, earlier this year you traced some Bitcoin
donations to ISIS, which were likely used
to fund a terror attack in Sri Lanka. How
did you manage to find out about these funds?
What were the techniques you used?
So, ISIS is raising funds on the blockchain
for more than two years and we can estimate
that they are raised more than hundreds of
thousands of dollars worth of Bitcoin. Also,
because the Bitcoin price went up in this
time. ISIS basically released a website for
fundraising, calling their supporters to donate
the organization with Bitcoins. Based on this
website, it is actively operating on the Tor
network, but also on the regular web infrastructure,
we managed to find several donations from
different timestamps from the last one year.
After tracing those donations, we can manage
to find the main wallet devices where they
group their transaction. And the interesting
thing was that we saw that some of the movement,
some of the funds didn’t move for a while
for several months.
And all these days before the attacks in Sri
Lanka, the mining was cashed out from those
addresses. That money was grouped to a bigger
transaction and the money went out from the
wallets. Again, we don’t know if it’s directly
related to the attacks, but it’s very interesting
to see that ISIS money moved on the blockchain,
certain amount of money day before those attacks.
Okay, and once you have tracked terrorist
funding on the blockchain, what’s the next
step, how do you stop it?
Once we find such an interesting intelligence
stuff that maybe can be tied together for
a terrorist activity in real life, we are
sharing this information with the governments
and we also sharing the wallet numbers and
wallet addresses with some third-party companies
that we find that the terrorist is probably
working through their services. We want to
share this information in real time as fast
as we can with this company in order to stop
these attacks.
Sometimes those companies aren’t aware of
the activity of their users, which is pretty
complicated to understand in real time. Even
for us as a blockchain intelligence company
is a big effort to understand these activities
in real time. But once we find the terrorist
activities that are tied to specific wallets,
we are sharing it with the authorities and
also with the third party companies that we’re
seeing that can help to stop this type of activity.
Okay, that makes sense. Now, can you give
us an esteem of how much of the illicit movements
on the Bitcoin blockchain is related to terrorist
groups?
So the numbers are pretty small. If we take
all the Bitcoin ecosystem and you’re trying
to measure the illegal activity on the blockchain,
which is about two or three percent from the
overall blockchain traffic, and if you take
the specifically terror financing inside this
illegal activity, I believe that it’s a very,
very low percentage.
So, it’s clear that cash is still king when
it comes to illegal activities.
According to the European Police Office, the
use of cash is the main reason triggering
suspicious transaction reports within the
European Union’s financial system, accounting
for more than 30% of the total. As shown in
the report by Chainalysis, illicit transactions
comprise less than 1% of Bitcoin activity
in 2018, down from 7% in 2012.
Still, terrorists appeared to have learned
from their previous mistakes and are getting
increasingly sophisticated in their approach
to crypto.
Malhama Tactical, one of the many jihadi groups
fighting in the Syrian civil war, was also
asking for Bitcoin donations on Twitter. This
time, though, they did not publish their crypto
address. Instead, donors were asked to send
a direct message to the group in order to
get more information on how to donate.
Even more sophisticated is the approach used
by the Al-Qassam brigades, the armed wing
of Hamas. A few months ago, the organization
set up a web page for donations, which generates
automatic Bitcoin addresses. The addresses
change every time the page is refreshed, which
makes it very challenging to track the funds.
Later on, it turned out that the same address
generator software used by Al-Qassam was also
being used by the Islamic State. Apparently,
after losing its territories in Syria, as
well as most of its assets, ISIS is now testing
new fundraising methods.
Also, let’s not forget that cryptocurrencies
are evolving beyond Bitcoin. Privacy coins,
such as Monero, ZCash, or Dash, enable higher
degrees of anonymity than Bitcoin does. Most
of these cryptocurrencies haven’t reached
enough adoption or usability to meet the terrorists’
needs but the situation might change in the
future.
According to the report by RAND, should a
widely adopted cryptocurrency emerge, that
has improved security and anonymity features
and is not subjected to strict regulation,
it could become a very dangerous tool in terrorists’
hands.
To know more about how the relationship between
crypto and terrorism might evolve in the future,
we reached out to Yaya Fanuse, a former CIA
analyst now focusing on cryptocurrency and
national security issues.
Yaya, what is lacking in crypto for it to
become a sustainable source of funding for
terrorism and will terrorists be able to use
it more effectively, as the technology evolves?
So for terrorists to adapt fully to use this
technology, they only can do it in a way where
there’s no trace to identity and those ways
are smaller right to use, not anonymous nation
coins to use, you know, privacy coins more
to use, maybe decentralized exchanges. But
those technologies have not really scaled
even within the crypto ecosystem. So that’s,
I think, always going to be very limited.
If cryptocurrency scale for people to use
them often for daily purchases for, you know,
without having to even necessarily cash out
into fiat currency. If that scales, it’s only
logical that terrorists and other bad guys
are going to use it, are going to be using
it. So it’s it’s it’s there should be a corresponding
relationship between how widely adopted crypto
is and unfortunately, how much terrorists
are going to use it or try to use it as well.
As far as we know, the amount of Bitcoin raised
by terrorist groups are quite small, almost
irrelevant. Why should we be concerned then?
You know, it depends on what a group is looking
for. If a group is trying to, you know, do
an attack or has a cell, you know, as a cell
that’s going to do an operation, that sort
of thing, you know, doesn’t cost a lot of
money. And that’s where the big concern is
that some of these groups may be even moving
thousands of dollars here and there. It doesn’t
it doesn’t cost much to do attacks nowadays.
The key concern with terrorist groups and
crypto is, again, not just how much they’re
raising now or how much they’ve raised, but
it is their level of adaptation. The fact
that we see them adapting, trying different
things, trying to get more anonymous and that
they’re learning.
So what should the regulators and cryptocurrency
companies do to prevent bad actors from taking
advantage of this technology?
So what regulators have to do in pretty much
all countries, they have to make sure that
the cryptocurrency exchange environment makes
it very difficult for terrorist groups and
other illicit actors to purchase crypto currencies
to sell and trade crypto currencies.
Cryptocurrency exchanges, many of them are
new or young in this in business. They have
to be made to follow those rules, the rules
for how they onboard their customers.
Verifying an identity, a transaction, monitoring
transaction limits, all the different things
that money service businesses need to do.
So that has to be standardized across the
board. If you don’t do that, criminals are
just going to find the exchange that has the
most loopholes where they can operate. But
collectively, law enforcement regulators and
the industry have to sort of tighten. They
have to make sure that they are following
and implementing the global standards for
anti money laundering and counter terrorist
financing.
At the moment, there is not much reason for
worrying: cryptocurrencies are far from being
a prominent source of funding for terrorists,
mainly because of their traceability and low
adoption rate. Still, blockchain technology
is evolving and terrorists are learning fast,
which means regulators and companies shouldn’t
ignore this potential threat. What do you
think guys, what can be done to keep the bad
guys out of the space? Should cryptocurrency’s
privacy be limited for the sake of security?
And can regulators and the industry create
a common front against terrorism? Comments
below! My name is Giovanni, thank you for
watching this video and always remember to
like subscribe and hodl!

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56 Comments

  • Reply Dean Roberts October 12, 2019 at 1:03 pm

    First 😜

  • Reply Dazen val October 12, 2019 at 1:06 pm

    second

  • Reply Derek Clow October 12, 2019 at 1:10 pm

    Next take a deep dive into the dark underbelly of the dollar

  • Reply Phoenix October 12, 2019 at 1:12 pm

    why dont you report on the dark side of the dollar and banks who fund terrorism ?

  • Reply DutchPartisan October 12, 2019 at 1:22 pm

    Is this a socalled whistle-blower?

  • Reply uriah hunter October 12, 2019 at 1:25 pm

    This was very informative and nice to have facts behind terrorist and crypto. 3% only is very low

  • Reply Irwin Vargas October 12, 2019 at 1:27 pm

    Bitcoin has addresses so it’s not paperless like money is…. please…smh

  • Reply Austin October 12, 2019 at 1:33 pm

    Thank you for your time putting this video together

  • Reply Herik rolitri October 12, 2019 at 1:35 pm

    his eyes are reading stuff from a GOVERNMENT screen

    Cointelegraph is working with the government !!!

    Blockchain is a digital ledger for the whole world to see.

    You are crazy if you think terrorist are using blockchain

    Typical fake news from Cointelegraph

  • Reply Ivan beers October 12, 2019 at 1:39 pm

    Bitcoin will get shut down by governments. XRP will succeed. XRP is working with the system

  • Reply DIYGUY October 12, 2019 at 1:42 pm

    First Jew said they raised 2500 but the 2nd Jew contradicts him..

    Typical

  • Reply The Gematria Code October 12, 2019 at 1:45 pm

    My glowdar is going off.

  • Reply Beating Obesity October 12, 2019 at 1:48 pm

    And what about the dark underbelly of the CIA? More FUD from US "intelligence".

  • Reply Handige Harrie October 12, 2019 at 1:51 pm

    most of their funding come from amerika/europe supporting "rebels" aka terrorists. and IS sold a shitload of oil to turkey.

  • Reply audiovideotweaker October 12, 2019 at 1:55 pm

    Pff detrimental job Cointelegraph! Read the comments and do that. What a disgrace as usual GIGO – garbage in garbage out at your outfit. MSM gonna MSM no matter what area of interest. Terrorist looking guy commenting on Bitcoin and demonizing it. -1 CIA are the criminals.. clean up your dirty corrupt criminal murderous house before you throw stones ya CLOWNS!

  • Reply Trisha funinthesun11 October 12, 2019 at 1:57 pm

    Well at least you can trace the ledger on the blockchain, you cant the Fiat Dollar which is the most corrupt currency for trafficking humanity, drugs and gold.

  • Reply M. BEL October 12, 2019 at 1:58 pm

    cointelegraph is mossad

  • Reply John Beachy October 12, 2019 at 2:10 pm

    How are all those regulations working out for you concerning terrorism and the dollar…check the percentages…terrorism is a problem no doubt but…

  • Reply dat boi October 12, 2019 at 2:15 pm

    CIA: psss hey arab dude
    arab: yea?
    CIA: I want to teach you about crypto and u can buy gun to defence your land
    arab: what is crypto?
    CIA: forget it, I will create account base on ur name k? and I will make sure it was your and give you money to buy gun
    arab: but.. we don't have proper internet and we still using outdated line
    CIA: its okayyy, I can provide you.. just shoot people, I cannot let my boss down to invade his favourite country for OIL

  • Reply TradeSafari Social October 12, 2019 at 2:30 pm

    First you're an idiot. Second, if it's used for crime means it is good. Try to pay a criminal with fake money. Probably won't work. Loser.

  • Reply Brady Carpenter October 12, 2019 at 2:49 pm

    “The Industry,” “Terrorists,” one in the same!🙄 If you know someone is a Terrorist, and there in lots of situations they could die, don’t give them crypto, give them fiat😉 If the fiat is gone, they’ll just print more, if the Terrorist dies with bitcoin, THAT COULD BE LOST FOREVER!!! DON’T DO IT!!!😮😱😆🤪😆😃😉

  • Reply Alts_Explode_to_da_Mooon! October 12, 2019 at 2:55 pm

    is deep state paying you for such BS vid ??

  • Reply latigo66 October 12, 2019 at 3:09 pm

    Unsubscribed

  • Reply Haji October 12, 2019 at 3:33 pm

    The only terrorist organization is the USA …

  • Reply Adam Sarwar October 12, 2019 at 3:36 pm

    This is dumb, especially considering that our governments are the largest terrorist organizations in the planet and they print money to enslave people. They even sell drugs to fund their black ops. 🐒

  • Reply MorgothCreator October 12, 2019 at 3:50 pm

    This kinda propaganda is old school, from 60'-70' :)))))

  • Reply Crypto Corda October 12, 2019 at 3:51 pm

    When the telephone was invented it was really a problem, all of a sudden criminals could organize themselves and their actions all over the country. We probably should have banned it right? The fact that you made this video, really makes all of us in crypto look at you with disgust, thanks for showing what you are really about coin-telegraph.

  • Reply Wayne October 12, 2019 at 4:19 pm

    The dollar has been used in more crimes than probably any other currency known to man. I don't want to hear it.

  • Reply Unknown Now October 12, 2019 at 4:22 pm

    Disappointed in cointelegraph for making a stupid report like this. Quite an insult to your intelligent crypto viewers!

  • Reply will13vilaede October 12, 2019 at 4:44 pm

    Fawk outta here bruh

  • Reply SanktGallus October 12, 2019 at 4:56 pm

    Bitcoin is just a terrorist trap for the stupid without paper oil dollarz … They should have used xrp.

  • Reply nima jafari October 12, 2019 at 5:01 pm

    Bro… your pronunciation is as good as mine!

  • Reply T F October 12, 2019 at 6:21 pm

    Government is terrorism

  • Reply mike dmann October 12, 2019 at 7:01 pm

    Pointless!

  • Reply Hans Brown October 12, 2019 at 8:45 pm

    Some of the people leaving comments are pure idiots, they can't handle the truth. Don't shoot the messenger you idiots.

  • Reply 420p Vision October 12, 2019 at 9:45 pm

    Monero. That is all.

  • Reply Xa Ya Za Za October 12, 2019 at 10:28 pm

    The money isn't the problem. They use shoes, we need to ban all shoes!

  • Reply Georgi Tiholov October 12, 2019 at 11:14 pm

    Those who would give up Essential Liberty

    to purchase a little Temporary Safety,

    deserve neither Liberty nor Safety.
    Benjamin Franklin

  • Reply dubstep1994 October 13, 2019 at 1:10 am

    0:20 But fiat is still the nr.1 black market, money laundering, terrorism finansing currency in the world. Together with the USA as always…even giving the terrorists weapons…and money through the CIA like they did with Osama Binladen ( the CIA agent )

  • Reply dubstep1994 October 13, 2019 at 1:11 am

    0:39 are you fucking joking? They are not locked out…only if they say officially that they are terrorists lol. But they are financed by the top of the world so it does no matter. They will have an unending cash flow as long as there is more money in wars than peace.

  • Reply dubstep1994 October 13, 2019 at 1:42 am

    2:45 "likely" why not just say " he hope " "we think" "we made up founded" – Likely is an empty claim. Useless.

  • Reply dubstep1994 October 13, 2019 at 1:43 am

    3:00 hundreds of dollars is peanuts…the CIA and others are giving them MILLIONS every year…so much propaganda and lies.

  • Reply dubstep1994 October 13, 2019 at 1:44 am

    4:00 useless information. IS he taking money for hit useless service? lol

  • Reply noddy uk October 13, 2019 at 1:44 am

    try stopping decentralized exchanges 😀

  • Reply A. JAY October 13, 2019 at 1:47 am

    Go sell it to those who have no clues, you're a joke, USD is used in most of evil things, then some other currencies, but USD is # 1. Period.
    In recent Survey, 98% of Arabs, rejects Bitcoin and other crytptos. it has been done in 4 or 5 countries, and Saudi was one of them, STOP THE LIES.

  • Reply dubstep1994 October 13, 2019 at 1:49 am

    8:45 "bad guys" The USA is the bad guys of the world…at least the CIA, NSA is without any discussion…

  • Reply Roy Wessbecher October 13, 2019 at 3:31 am

    Ridiculous. "Bad Actor" depends on the act, not the privacy of the currency.
    You gonna stop window tinting because it creates privacy in cars?
    "Bad actors" of all kinds drive around in blackened-out limos. Oh no !!! 😲
    Ban tinting now! – before it gets out of hand! 🗽🗽🗽
    – and shades too, damn it! 😎😎😎 If you have nothing to hide why use them? 😱

  • Reply Erik Sierveld October 13, 2019 at 4:47 am

    Unsubscribed

  • Reply Ray Peck October 13, 2019 at 6:13 am

    It's a question that governments and those outside the space have so it's fair to take a look and this gave a Fair picture. Don't be afraid of seeing what others think that matter. So I found the video cutting-edge and informative. That said, I'm no expert, but my opinion is that trying to over-regulate something because it can be misused would be like trying to eliminate all cash because we don't know how you're spending it. Freedom will always have the ability for some to harm. You always want to try to stop them and act against them, but you have to be careful to not shut everyone down because of a few bad ones. That's true for all laws and all security situations. Those actions should only be taken so that there is more freedom to do, to think, to conduct business, and to actively partake of life. The greater good leans on the side of more freedom with restrictions only to help that occur. It made me happy to hear that the efforts to raise money failed and they were able to track them down. But even if that had failed, you don't throw the baby out with the bathwater. That doesn't mean I know what the answer exactly should be, but let's lean toward that side.

  • Reply Me 2 October 13, 2019 at 9:30 am

    Everyone know its The governement and elite pedophiles responsible for That whole market anyway. Poor common ppl cant afford even if they wanted to buy a Nice Child… What a fking joke this is. As if The Fiat papper money isnt playing for all of it before 2012. Or u gna claim in next vid that the whole black market arrived along with crypto? Wouldnt be an exaggeration comparing to this anyway. Just in line with.. A Nice red line throughout ur bs

  • Reply רועי גיל October 13, 2019 at 9:44 am

    You have this great platform yet you use it for things like this, shame. Bankers and politicians are destroying our generation and you are trying to get views, Unfollow.

  • Reply Heith Miller October 13, 2019 at 9:25 pm

    Yes there are bad people in the world = more KYC and others regulations for you, be afraid. F-them.

  • Reply dmc101100 October 14, 2019 at 2:20 am

    Why don't they just use monero

  • Reply nelson carreiro October 14, 2019 at 3:41 pm

    garbage video

  • Reply Gimei Nagimesi October 14, 2019 at 10:15 pm

    This is unbelievably skewed.

  • Reply SCP October 15, 2019 at 8:06 am

    OMG! Criminals use money? NO FUCKING WAY…. I thought they bartered with toilet paper its anonymous and untraceable.

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