How Terrorist Organizations Like ISIS are Using Cryptocurrency for Funding

Introduction

Terrorist organizations such as ISIS have been increasingly leveraging cryptocurrency for their illicit activities. This article explores how these organizations use crypto and the challenges it poses to global financial systems.

ISIS Conducts Crypto Fundraising

TRM Labs, a blockchain analysis firm, has uncovered evidence that ISIS members in Tadzhikistan, Indonesia, Pakistan, and Afghanistan have financed their activities using cryptocurrencies. Most of these malicious transactions involve the use of Tethers stablecoin USDT on the Tron (TRX) blockchain. The frequency of such transactions is also on the rise.

Fundraising Projects and Scams

The funds obtained by ISIS are primarily sourced through fundraising projects. Some of these projects directly target funds for ISIS, even utilizing local crypto exchanges as donation points. In other cases, these funds are raised through scams, where charitable causes are used as a cover. For example, the devastating earthquakes in Turkey and Syria were exploited as a reason to raise capital from unsuspecting donors.

Moreover, ISIS often splits and sends the funds in smaller denominations, typically around $10,000 each. By doing so, they aim to avoid detection by law enforcement agencies and research firms like TRM Labs. These raised coins are primarily used for recruiting soldiers.

Other Malicious Crypto-Users

ISIS is not the only malicious actor utilizing cryptocurrencies for their activities. Similar fundraising campaigns have been identified to support military personnel in Russia, showcasing the widespread adoption of such practices. It is evident that both sides of conflicts, including Ukraine and Russia, have supporters outside of government structures.

In addition to fundraising, hacking remains prevalent in the world of cryptocurrencies. Hackers had a record-breaking year in 2022, and their activities have continued to increase in the second quarter of 2023.

Conclusion

The inability of organizations like ISIS to access regulated bank accounts due to global sanctions has pushed them to explore alternative methods for financing, with cryptocurrency being a primary choice. Combating the use of crypto by terrorist organizations requires ongoing vigilance and robust regulatory measures.