TRM Labs: ISIS Allies Utilized Crypto to Raise Millions for Terrorism

Middle Eastern terrorist groups associated with ISIS are increasingly turning to cryptocurrency to conduct their operations, according to a new report from TRM Labs.

On Friday, the blockchain analytics and compliance firm wrote that it has found “mounting on-chain evidence” of the organization’s networks in Tajikistan, Indonesia, Pakistan, and Afghanistan digital assets – especially Tether stablecoins (USDT) on the Tron (TRX) network.

According to the firm, one such group in Tajikstan controlled an address that received $2 million in USDT over 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 to 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 its funds, allowing TRM Labs and the exchange to track down and arrest Shamil Hukumatov, a senior ISIS fundraiser, last month.
Such is the crux of the issue when it comes to regulating cryptocurrencies – especially in the West. While the technology’s proponents often champion digital assets as tools for financial sovereignty and privacy, its loudest critics in Washington view it as potential avenues for money laundering and sanctions violation that aren’t available using traditional banking rails.

United States regulators have made no moves toward outright banning crypto, but the US Treasury Department has noted its active use for terrorist financing and other forms of illicit finance – including by ISIS.

In fact, a bi-partisan Senate bill proposed last week seeks to afford the Treasury Department new authorities for cracking down on DeFi exchange operators that don’t comply with know your customer (KYC) and anti-money laundering (AML) obligations typical of centralized exchanges.
Worldwide Terrorist Financing
Besides Tajikstan, terrorist organizations held accounts in Indonesia that received USD 517,000 as part of fake fundraising campaigns to free ISIS families held in Syrian camps – again using USDT on Tron.
This year, a media unit connected to Pakistani Isis affiliate ISPP posted messages to an ISIS messaging server including several crypto addresses. The account owner claimed to be soliciting funds to help survivors of the February 2023 earthquakes in Turkey and Syria, but the addresses had already been flagged by TRM Labs as being connected to ISPP.

“Finding these campaigns, tracing the donations on the blockchain, and identifying the donors is critical to map out and potentially disrupt pro-ISIS networks around the world,” concluded the firm.

Source » cryptonews.com