Over the past few years, there have been growing concerns about cryptocurrencies being used for illegal activities. Although the majority of these are overrated, there is no denying that there are some bad actors trying to take advantage of the decentralized nature of the technology.
TRM Labs, a blockchain intelligence company, recently published a report on the increasing 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 On July 21, 2023, a blockchain intelligence firm revealed the details of its investigation into the use of crypto assets in the world of terrorism.
According to TRM Labs, most of the transactions by the various pro-ISIS networks were carried out using the stablecoin Tether (USDT) on the Tron network.
The intelligence firm reported a case where various pro-ISIS groups used cryptocurrency to recruit fighters in Tajikistan for an ISIS affiliate. one of fUnsuccessful campaigns reportedly raised $2 million worth of USDT through a crypto exchange address in 2022.
Furthermore, TRM Labs claims that the figure, Shamil Hokomatov, who is behind this crackdown, was arrested by Turkish authorities in June 2023. The success of this operation is said to hinge on the exchange’s ability to identify the account operator through know-your-customer (KYC) procedures.
In the report, TRM Labs cited other cases where cryptocurrency exchanges were used to fund terrorism-related activities in Indonesia, Pakistan, and Afghanistan.
The blockchain intelligence firm mentioned the on-chain links of these cases to pro-ISIS fundraising campaigns in Syria. TRM Labs claims that the West Asian country remains a major hub for crypto use by ISIS and its supporters.
What is the position of cryptocurrency exchanges on terrorism?
In its study in Tajikistan, TRM Labs notes that the cryptocurrency exchange alerted local authorities the moment it identified the person running the fundraising account. Most cryptocurrency companies and exchanges have always taken a strong stance against terrorism and related activities.
In May, Binance, the largest cryptocurrency exchange, reiterated its commitment to support its stance against terrorism. This was in response to A Reuters articlewhich raised questions about the exchange’s compliance policies to prevent and address crypto-based terrorist financing.
In a strong defense, Binance stated that it takes the issue of counter-terrorism “very seriously” and has done more to keep bad actors off its platform than any financial institution.
Part of the response stated the following:
Binance currently has over 750 compliance support staff, many of whom have previous backgrounds in law enforcement and regulatory agencies. So far this year, we’ve already helped law enforcement freeze/seize over $1 billion. Approximately half of our compliance team is involved in sanctions monitoring work, such as anti-money laundering, name checking, know-your-customer (KYC) setup and cross-chain monitoring.
Apart from Binance, Coinbase – another prominent crypto exchange – has always publicly revealed its “anti-terrorism” stance. In 2021, the company published a dossier a report on “the use of cryptocurrency to finance terrorism” and what you are doing to prevent it.
Crypto total market cap at $1.164 trillion on the daily timeframe | Source: TOTAL chart from TradingView
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