ISIS Allies Used Cryptocurrency To Raise Millions For Terrorism
Middle Eastern terror groups associated with ISIS are increasingly turning to cryptocurrencies to conduct their operations, according to a new report from TRM Labs.
On Friday, blockchain compliance and analytics firm wrote which has found “growing on-chain evidence” of the organization’s networks in digital assets from Tajikistan, Indonesia, Pakistan and Afghanistan, especially the Tether (USDT) stablecoins on the Tron (TRX) network.
According to the firm, one such group in Tajikistan controlled an address that received $2 million in USDT on Tron in 2022, as part of a fundraising campaign to recruit fighters for an ISIS affiliate, ISKP.
“ISKP has long sought to recruit Tajiks to join ISKP in Afghanistan and launch attacks against the Tajik government,” TRM Labs explained. “In 2022, ISKP launched its first attacks in Tajikistan.”
The parties behind the address used a KYC-controlled exchange to cash out some of their funds, which allowed TRM Labs and the exchange to track and arrest Shamil Hukumatov, a prominent ISIS fundraiser, last month.
That is the crux of the matter when it comes to regulating cryptocurrencies, especially in the West. While technology advocates often champion digital assets as tools for financial sovereignty and privacy, their loudest critics in Washington they see it as potential avenues for money laundering and sanctions violation that are not available using traditional banking rails.
Regulators in the United States have made no move towards a complete ban on cryptocurrencies, but the US Treasury Department has. noted its active use for terrorist financing and other forms of illicit financing, including by ISIS.
In fact, a bipartisan Senate bill proposed last week seeks to grant the Treasury Department new authorities to crack down on DeFi exchange operators who fail to comply with know-your-customer (KYC) and anti-money laundering (AML) obligations typical of centralized exchanges.
financing of global terrorism
In addition to Tajikistan, terrorist organizations had accounts in Indonesia that received $517,000 as part of fake fundraising campaigns to free ISIS families being held in Syrian camps, again using USDT on Tron.
Earlier this year, a media unit connected to ISPP, a Pakistani affiliate of ISIS, posted messages on an ISIS messaging server that included several cryptographic addresses. The account owner claimed to be requesting funds to help survivors of the February 2023 earthquakes in Turkey and Syria, but TRM Labs had already marked the addresses as being connected to ISPPs.
“Finding these campaigns, tracking donations on the blockchain, and identifying donors is critical to mapping and potentially disrupting pro-ISIS networks around the world,” the firm concluded.