The cryptocurrency world is once again about to face another threat to its reputation in what seems to be an unrelenting nightmare. Multiple research shows that bitcoin and crypto assets are used by militant groups to fund their operations.
On 13 March, U.S. District Judge sentenced Zoobia Shahnaz, of Long Island, New York to 13 years in prison for providing financial support to a foreign terrorist group, specifically to the Islamic State of Iraq and al-Sham (ISIS), for more than $150,000. Shahnaz pleaded guilty in November 2018.
Shahnaz fraudulently raised the money using stolen credit cards to buy about $62,000 in Bitcoin and other cryptocurrencies. She also defrauded several financial institutions in raising money for ISIS, including a loan amounting to about $22,500. Shahnaz then made several wire transfers totaling over $150,000 to ISIS fronts for individuals and organizations in Pakistan, China, and Turkey.
Shahnaz accessed ISIS violent websites and message boards linked to the jihad, and social media and messaging accounts from established ISIS recruiters, facilitators, and financiers.
Shahnaz also wanted to travel to Syria to join ISIS and had been studying online for the group. Court-authorized search warrants conducted at Shahnaz’s Long Island home resulted in the confiscation of extremist and jihad-related material, including a photograph of an explosive suicide vest and a night vision lens.
She was detained on July 31, 2017, at John F. Kennedy International Airport while preparing to board a flight to Turkey, a common entry point for Syria, the Justice Department stated.
Privacy In Crypto
Cryptocurrency has come to terrorism, with a number of extremist groups leveraging the privacy of blockchain technology for fundraising and finances. Data privacy and resistance to censorship provide benefits for unscrupulous dealings. If used wrongly cryptocurrencies may be seen as a way of evading regulatory oversight. As a result, crypto-privacy is under threat.
The government has strengthened regulatory standards for digital currencies to counter digital anonymous crimes, money laundering and so on. A new set of guidelines has been created to address cryptocurrencies and terrorist financing.
The Intergovernmental Financial Action Task Force, which combats money laundering and terrorist funding, noted in an October 19 statement that cryptocurrencies are being used by the Islamic State and al-Qaeda, and called on governments around the world to create guidelines for their use.
Nevertheless, as cryptocurrency gains more attention, we should expect regulators to come up with better counter-terrorism solutions without limiting our privacy rights.