An expert on terror financing says US authorities are failing to tackle the threat represented by extremists using cryptocurrency.
Steven Stalinsky, the executive director of the Middle East Media Research Institute, says extremist groups like ISIS are exploiting the anonymity provided by blockchain to fund their operations – but the US is still playing catch up.
He warns something must be done before a cryptocurrency is used to finance an attack on the US.
Writing in the Washington Post, Mr Stalinsky said cryptocurrencies such as Bitcoin, Dash, Ethereum, Monero, Verge, and Zcash are a major alternative funding source for terrorists since the collapse of ISIS’ ‘Caliphate’ in Syria and Iraq.
However, he says The National Strategy for Counterterrorism report released by the White House in October is not taking the issue seriously enough.
He wrote: “Transactions are swift and anonymous, and disrupting them is difficult.”
Mr Stalinsky also expressed concern about Telegram launching its own cryptocurrency.
The secure messaging app is already commonly used by terrorists to communicate and spread propaganda, and there are concerns the cryptocurrency could make it even easier for extremists to move cash.
He said: “Communications about transactions often take place on encrypted messaging apps, such as Telegram, favoured by terrorist groups because they are easy to use and offer a secure venue for planning and recruiting — and for advising Western supporters about how to use cryptocurrency.”
The issue hit the headlines this week when a 27-year-old New Yorker admitted to wiring more than $150,000 to ISIS in Pakistan, China, and Turkey in 2017. She committed credit card fraud to buy Bitcoin and other cryptocurrencies and then converted them into fiat currency.
According to New York investigators, Zoobia Shahnaz was intercepted when she tried to go to war-torn Syria in December last year. She faces up to 20 years in prison.
“It should not take a major terrorist attack, planned on encrypted apps and financed with cryptocurrency, to get (the US government’s) attention,” Mr Stalinsky added.
The National Strategy for Counterterrorism states the administration “recognises the full range of terrorist threats that the United States confronts within and beyond our borders, and emphasises the use of all elements of national power to combat terrorism and terrorist ideologies.”
It adds: “Our emphasis is on targeting terrorist networks that threaten the United States and our allies and on disrupting and denying their ability to mobilise, finance, travel, communicate, and inspire new followers.”