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Bitcoin’s role in terrorism worries U.S. authorities

Ben Kothe / BuzzFeed News; Getty Images (3)

That promoter Claiming to be Azym Abdullah (Azym Abdullah) does not need much money to set up a website for ISIS and play the horrible beheading video. What he needs is confidentiality, so he reportedly switched to cryptocurrency in 2014.

He paid a little more than 1 Bitcoin, about $400 at the time, to register a domain name in Iceland and host it on a global server. His website requires visitors to donate to help pay for maintenance. Those are also Bitcoin.

Sending donations in this way allows his donors to use a string of letters and numbers to protect their identities-a popular technique that makes it more difficult for banks, law enforcement agencies, and the U.S. Department of the Treasury to track and mitigate support for terrorism The flow of funds.

Abdullah’s reliance on Bitcoin was documented in the 2017 Treasury Department’s Intelligence Assessment, which was received by BuzzFeed News as part of its file cache, which included internal emails and reports on cryptocurrencies. The intelligence assessment also revealed evidence of nine other incidents in which terrorism supporters used cryptocurrency to fund their activities, from buying air tickets to sabotaging political websites to arranging travel to Syria.

The vast majority of encrypted transactions are used for legal purchases. But these documents give us insight into the U.S. government’s ongoing and sometimes lagging struggle against the use of encryption to breed terrorism and crime, as well as the various ways in which cryptocurrencies are assumed to be anonymous and easily transferred across the globe. -Can be used for evil purposes.

For example, in 2016, analysts from the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury issued a warning to so-called mixers​​–companies that break encrypted transactions into smaller parts to further protect the identity of the owner. When these companies operate in the United States, they should register with FinCEN and provide information about suspicious customers and transactions. But the report is one of the documents received by BuzzFeed News, which found that “out of the 30 largest hybrid services, none have registered…or show any evidence of compliance programs.”

It was not until nearly four years later that the government took action. Last year, FinCEN fine One of the coin mixers received USD 60 million in compensation for failing to “collect and verify customer names, addresses, and other identifiers in more than 1.2 million transactions.” The government found that these transactions helped criminals involved in illegal narcotics, fraud, forgery, and exploitation of children, as well as neo-Nazis and other white supremacist groups.Financial Center Say It tracks transactions worth more than $2,000 from the mixer to a website called Welcome to watch the video Host child sexual abuse materials.

The documents examined by BuzzFeed News traced the Treasury Department’s concerns about encryption technology back at least 10 years ago. FinCEN is now trying Change its rules Therefore, any company that deals with cryptocurrency must obtain clearer information about its customers and their transactions.

FinCEN and the Ministry of Justice did not respond to messages seeking comment.

Alex Fradkin of BuzzFeed News

Office of the Financial Crimes Enforcement Network, affiliated with the U.S. Department of the Treasury, located in Vienna, Virginia

Yaya Fanusie, a former CIA analyst and national security impact expert on cryptocurrencies, said that he believes that US officials are ahead of their European counterparts in solving this problem. However, like other experts contacted by BuzzFeed News, he stated that he believes a new type of financial investigator is needed to prevent cryptocurrency from being misused by terrorists, drug dealers, and other criminals.

“For field personnel, cryptocurrency is more difficult to understand than more traditional methods of money laundering,” said Fanussi, now a senior researcher at the New American Security Center. “Until recently, skills and resources were deployed at the field level.”

With the slow adjustment of regulators and the industry, the attractiveness of cryptocurrency remains strong, and terrorists find that they can use it to raise donations to fund operations.Last August, the Ministry of Justice Announce An investigation conducted in cooperation with the Ministry of Finance obtained millions of U.S. dollars as part of “the largest terrorist organization’s cryptocurrency account seizure in history.”

one of indictment Describes how al-Qaeda and its affiliated groups carry out money laundering activities and solicit donations in the form of cryptocurrency through social media accounts. Then, they used the network to make donations “to advance their terrorist goals.” A government-tracked Al-Qaida-related network received more than 15 bits in 187 transactions from February 5 to February 2019. Currency, worth thousands of dollars. . 25, 2020.

Encryption technology is squeezing the same weaknesses in the financial system FinCEN file, A global project launched by BuzzFeed News and the International Federation of Investigative Journalists in late 2020. News organizations found that major Western financial institutions allowed dirty money to flow around the world under the noses of the US authorities. Like traditional currencies, Bitcoin and other cryptocurrencies can test the ability of financial institutions to track their transactions and the ability of U.S. authorities to prevent crime.

During the nomination hearing of the Senate Finance Committee, the incoming Treasury Secretary Janet Yellen Say The cryptocurrency has the potential to “improve the efficiency of the financial system.”

“At the same time,” she said, “it can be used to fund terrorism, promote money laundering, and support malicious activities that threaten the national security interests of the United States and the integrity of the United States and the international financial system.”

Swimming Pool/Getty Images

Janet Yellen at the Senate Finance Committee Hearing, January 19

Cryptocurrency is easier to transfer than other financial instruments, allowing criminals to quickly transfer assets to different parts of the world-this is an advantage when trying to avoid US law enforcement scrutiny or when it is about to be discovered.

“You can escape to jurisdictions or entities you don’t care about,” said Pawel Kuskowski, CEO of Coinfirm, a cryptocurrency analysis and compliance company. “This is a mechanism designed to protect themselves, knowing that they will receive illegal funds.”

There are currently thousands of different virtual currencies traded in a still developing market marked by secrecy. Usually, cryptocurrency owners obtain these funds on exchanges and store them in virtual wallets, with addresses specified only by a unique arrangement of letters and numbers-another layer of anonymity obscures those who actually own the funds.

Just as banks are responsible for monitoring customer transactions, cryptocurrency exchanges also have legal obligations to fulfill. They even send suspicious activity reports or SARs to the government, and banks use the same form when they encounter transactions that imply criminal activity.

However, some exchanges opposed FinCEN’s proposal for stricter supervision, saying that these requirements are more onerous than those faced by the banking industry. Investment companies such as Square and Andreessen Horowitz, the payment company founded by Twitter CEO Jack Dorsey, also said that the new rules will be onerous and may infringe the privacy of customers.

The Electronic Frontier Foundation wrote in a public comment letter earlier this year that it believes that the regulations proposed by FinCEN will “undermine the civil liberties of cryptocurrency users” and “enable the government to access large amounts of sensitive financial data.” ●

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