Extremists getting caught out by fake crypto offers

Neo-Nazi and Islamist terror supporters 'being conned by cryptocurrency scams', says ex-CIA operative

Neo-Nazis and supporters of terror groups like ISIS and al-Qaeda are being scammed by elaborate cryptocurrency fraudsters, according to an ex-CIA analyst.

Some extremist organisations raise funds through online crypto donations from supporters on the darknet.

The issue hit the headlines last month when a far-right group calling themselves Order of Dawn started a cryptocurrency crowdfunding campaign for their violent ‘Reconquest’ of Europe.

Order of Dawn is opposed to African and Middle Eastern migration to Europe, calling it an ‘invasion’ and a ‘genocide’.

However, many alleged extremist groups are likely be fraudsters without a political agenda exploiting supporters, according to Yaya J Fanusie, the director of analysis for Defense of Democracies’ Center on Sanctions and Illicit Finance.

Former CIA operative Yaya J Fanusie

Former CIA operative Yaya J Fanusie

He said: “Fraud and scams are prevalent in the crypto space.

“For example, I’m not convinced that the newly exposed darknet site called ‘SadaqaCoins’ is a true jihadist site.

“It’s quite plausible it’s a scam.”

Face value…

Mr Fanusie, who spent seven years as both an economic and counterterrorism analyst in the CIA, added: “Claims of terrorist cryptofunding should not be taken at face value.

“I usually will accept a campaign as ‘legitimate’ if there is credible reporting that the campaign is being circulated on known, jihadist sites (who would assumedly do their own vetting before continuing to circulate campaigns).”

Cryptocurrency is a form of digital money that uses encryption to secure transactions and control the creation of new units. The most well-known is Bitcoin.

The technology uses cryptography, a form of secret coding originating from the Second World War, to process transactions securely – and is incredibly hard to trace.

Credit cards, for example, require identification which law enforcement agencies can access.

But cryptocurrencies do not operate within this established system. In fact, many cryptocurrencies were invented in part to sidestep the existing regulated financial system.

Grappling with scams

Financial authorities worldwide continue to grapple with scams in the still-young cryptocurrency industry.

In August the UK’s Financial Conduct Authority (FCA) warned that crypto investment scams are increasingly targeting British investors.

The watchdog warns that fraudsters often use fake celebrity endorsements and professional-looking websites to lure prospective investors.

A spokesman said: “Scam firms can manipulate software to distort prices and investment returns.

“They may scam people into buying non-existent cryptocurrencies.

“They are also known to suddenly close consumers’ online accounts and refuse to transfer the funds to them or ask for more money before the funds can be transferred.”

Wave of violence

Order of Dawn, which claims to be based in either the Czech Republic, Hungary, Poland, or Slovakia, is crowdfunding the Monero (XMR) cryptocurrency to support a sickening planned wave of violence, according to the Counter Extremism Project (CEP), an international policy organisation formed to combat extremist ideologies.

The group aims to create an armed militia and “repel or sink the boats of the invaders and the gigantic vessels of the collaborators” – apparently a reference to European naval forces.

The funds raised will also be used to set up safe houses, buy land in Eastern Europe and acquire firearms, vehicles and explosives.

The leaders claim to have raised 62 XMR so far – roughly $6,600 (£5,000). Details about the website are limited, but the name server is San Francisco-based company Cloudflare.

Order of Dawn’s website also allows visitors to mine Monero for the group on the site itself.


A CEP spokesman said: “The fact that the group is crowdfunding cryptocurrency on their website allows individuals to contribute with little effort or mobilisation needed.

“Internet services companies, such as Cloudflare, should be on guard to make sure that they do not aid or assist terrorists.”

Analysts have warned bitcoin and other cryptocurrencies are already being used to secretly move cash between sympathisers and terror cells throughout the world.

Nikita Malik, the author of a recent report by the UK-based Henry Jackson Society about online extremism called Terror In The Dark, said: “The authorities must move urgently to increase their knowledge of terrorists’ activities in cyberspace and their use of technologies such as bitcoin.

“By fundraising and making financial transactions online, terrorists and other criminals can avoid interference from financial regulators or other third parties who might otherwise take steps to prevent their operations.

“Regulation in this area has to move carefully if we are to balance liberties with guarding against threats to our security – but the time has come to deny extremists the space they need online to plan fresh atrocities.”

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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