Over the past few years, there have been growing concerns about the use of cryptocurrencies for illegal activities. Although most of them are overrated, it cannot be denied that there are some bad actors trying to take advantage of the decentralized nature of the technology.
TRM Labs, a blockchain intelligence firm, recently released a report on the growing use of crypto assets by terrorist organizations.
ISIS Allies Used Crypto to Raise Funds: TRM Labs
TRM Labs has revealed its findings regarding cryptocurrency fundraising by ISIS and its supporters across Asia. In a report dated July 21, 2023, the blockchain intelligence company disclosed the details of its investigation into the use of crypto assets in the world of terrorism.
According to TRM Labs, most of the transactions from the various pro-ISIS networks were conducted using Tether stablecoin (USDT) on the Tron network.
The intelligence firm cited a case in which various pro-ISIS groups used cryptocurrencies to recruit fighters in Tajikistan for an ISIS affiliate. One of pNo-crowd campaigns reportedly raised $2 million worth of USDT through a crypto exchange address in 2022.
Additionally, TRM Labs claims that the personality, Shamil Hukumatov, behind this campaign was arrested by Turkish authorities in June 2023. The success of this operation is said to depend on the exchange’s ability to identify the account operator through its know-your-customer (KYC) measures.
In the report, TRM Labs cited other cases where cryptocurrencies and crypto exchanges were used to finance terrorism-related activities in Indonesia, Pakistan and Afghanistan.
The blockchain intelligence company cited the chain links of these cases to pro-ISIS fundraising campaigns in Syria. TRM Labs claims the West Asian country remains a major hub of crypto use by ISIS and its supporters.
What is the position of crypto exchanges on terrorism?
In its study in Tajikistan, TRM Labs noted that one crypto exchange notified local authorities the moment it identified the person running the fundraising account. Most crypto companies and exchanges have always taken a strong stance against terrorism and similar activities.
In May, Binance, the largest cryptocurrency exchange, reiterated its commitment to maintain its stance against terrorism. This was in response to a Reuters article that raised questions about the exchange’s compliance policies for preventing and dealing with crypto-based terrorist financing.
In a strong defense, Binance stated that it takes the topic of counter-terrorism “very seriously” and has done more to keep bad actors off its platform than any financial institution.
Part of the response states:
Binance currently has more than 750 employees supporting compliance, many with former law enforcement and regulatory agency backgrounds. So far this year, we’ve already helped law enforcement freeze/seize over $1 billion. Almost half of our compliance team is involved in sanctions control work, such as anti-money laundering, name screening, Know Your Customer (KYC) onboarding and on-chain monitoring.
In addition to Binance, Coinbase – another prominent crypto exchange – has always publicly disclosed its “anti-terrorism” stance. In 2021, the company published a report on “the use of cryptocurrency in the financing of terrorism” and what it is doing to curb it.
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