Expert: Terrorists Already Using Cryptocurrencies but with Limited EfficiencySep 11, 2018 at 23:32
A cryptocurrency expert has admitted to the United States Congress that terrorist groups are already utilizing cryptocurrencies for their fundraising activities but noted that they are not yet efficient in the said process.
Yaya Fanusie, Director of Analysis at the Center on Sanctions and Illicit Finance under the Foundation for Defense of Democracies, explained to legislators that due to failures of multiple bitcoin fundraising attempts, fiat currency remains substantially more useful to terrorists.
He noted during his testimony delivered to the US House Financial Services Committee that a number of terrorist groups including the al-Qaeda and the Islamic State attempted to raise funds using cryptocurrency several times but did not experience notable progress.
Fanusie cited the example of a terror group known as Mujahideen Shura Council in the Environs of Jerusalem which tried to raise funds via cryptocurrencies for several weeks in 2016 but only managed to collect over $500 in donations.
The expert added that cryptocurrencies are not an effective medium of exchange for terrorists as they are often located in areas with poor internet infrastructure which will force them to rely on using hard cash.
The official also said that another factor keeping terror groups from effectively using cryptocurrencies as their primary medium of exchange is the required expertise in the said field aside from the volatility of its value.
However, the official warned that it is a possibility that in the coming years, terror groups may fully adapt to the said technology.
“When paper checks, credit cards, and PayPal each emerged, criminals exploited them early on. There are enough case studies of jihadist groups experimenting with cryptocurrencies to suggest that law enforcement and the intelligence community must prepare for terrorists to try to exploit digital tokens as the technology spreads,” Fanusie stated.
He recommended during the hearing that in order to prevent the said scenario from happening, all units in the US government that investigates terror funding must become proficient as well in analyzing cryptocurrency transactions. Likewise, he suggested that financial regulators and law enforcers should be urged to increase their engagement with crypto exchanges as it is where most people purchase their cryptocurrencies.
Ultimately, he asked for all crypto enthusiasts to help in flagging illicit crypto wallets in order to prevent such fundraising activity which could be done by incentivizing law-abiding exchanges.
Amid his testimony, Fanusie called out cryptocurrency sites saying that the full context of his statement was intentionally not published in order to capitalize from it.
So telling how #crypto pubs are latching on to my testimony before Congress @FinancialCmte last week with headlines like "Terrorists failing to raise funds via crypto." Please read my written testimony, not the headlines circulating in crypto land. https://t.co/TJrA2MzHHv
— Yaya J. Fanusie (@SignCurve) September 10, 2018
His full statement can be accessed here https://financialservices.house.gov/uploadedfiles/hhrg-115-ba01-wstate-yfanusie-20180907.pdf
It can also be noted that there are also reports that white supremacist groups around the world are also exploiting the use of cryptocurrencies in raising funds but with a greater rate of success compared to terror groups.