Is Bitcoin A Credible Payment System For Terrorists?
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| Bitcoin photo credit: GettyGetty |
According to a 2015 Europol report, bitcoin was used in over 40% of high profile investigations involving payments between criminals in the European Union.
To understand why this is, we must examine the anonymity that such a service offers.
Bitcoins are created through a process of ‘mining’ to verify each
transaction on the blockchain. While information regarding each
transaction is recorded on the blockchain, it is not directly linked to
names, physical addresses, or other identifying information. This makes
it anonymous to a certain degree, and complicates efforts by law
enforcement agencies to identify individual transactions and link them to users.
Terrorists and criminals use bitcoin for illicit transitions, as it
provides financial security. The blockchain acts as an impartial
intermediary, ensuring that coins are irrevocable once spent. The
network hampers any attempt made to recall a verified bitcoin
transaction unless the recipient actually sends the coins back to the sender. By doing so, it prevents double spending and ensures that money cannot be duplicated within the network. Moreover, a network of ‘miners’
works to ensure each bitcoin transaction is unique and legitimate. If
an attempt at duplication is made, the block-chain rejects the
transaction as forged
and faulty. Therefore, it benefits both criminals and terrorists
purchasing goods and services on the Darknet, who would otherwise be at
risk of being scammed by rival criminal organisations on the other side
of the network.
In August 2015, for example, authorities in the United States
convicted Mohamed Elshinawy, from Maryland, for providing material support
of a financial nature to Islamic State. According to official records,
Elshinawy had received approximately $8,700 through various financial
channels including Western Union and PayPal accounts, from individuals
with known connections to Islamic State, for the purpose of funding
terrorist operations. Elshinawy, who had received the money between
March and June 2015 from various overseas companies located in the
United Kingdom and Bangladesh, intended to use the funds to launch
terrorist attacks
in the US. According to the US Department of Justice, Elshinawy and
other members of Islamic State had used various means of secret
communications to conceal their criminal association and activities from
law enforcement.
Since 2014, there have been reports of high-ranking jihadist fighters
in Raqqa, a former Islamic State stronghold in Syria, making use of
money transfer offices for small or domestic purchases, and using
advanced modern technology in the form of bitcoin for long-distance
international transactions. In January 2015 it was reported that Islamic
State, in what was then an unprecedented move, had started raising
funds through bitcoin. A fundraiser identified as Abu-Mustafa argued
that a massive crackdown by US law enforcement on mainstream financial
platforms, coupled with a lack of financial and other resources
available to Islamic State supporters in the United States and South
America, meant that the Darknet should be used to raise funds in bitcoins. Abu-Mustafa raised about five bitcoins, valued at approximately $1,000 (at the time) before the account was closed.
Similarly, in June 2015, authorities in the United States convicted
Shukri Amin, a 17-year-old in Virginia, for lending material support to
Islamic State. Amin was charged with helping Islamic State supporters
travel to Syria by using social media sites to ask donors to pay in
bitcoin currency as financial support for the group. In another case, a
woman was arrested in New York in December 2017 for fraudulently
obtaining $62,000 in bitcoin, which she then allegedly wired to fund
Islamic State. After a failed attempt to join the terrorist organisation
in January 2016, the woman used false information to acquire loans and
multiple credit cards, which she then transferred into bitcoin and other
cryptocurrencies before sending the money via Pakistan, China, and
Turkey to fund Islamic State. Prosecutors accused the woman of fraud and providing material support to a terrorist organisation.
Though it is still unclear how successful both online sites and
offline networks have been in raising bitcoin funds to support terrorist
organisations, these examples demonstrate an awareness of, and interest
from, groups like Islamic State in the merits of bitcoin as a medium
through which to finance themselves online.
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