Chainalysis Helps The Department of Justice In Taking Down 2 Major Terrorism Financing Campaigns
- More than 300 cryptocurrency accounts were seized, along with four websites and Facebook pages.
- The investigation revealed more details about the infrastructure of the terrorist organizations and the way they gathered and laundered digital assets, mainly BTC.
U.S. Department of Justice building in Washington, D.C, 10 January, 2012. Diego M. Radzinschi/The National Law Journal
On August 13, the U.S. Department of Justice announced the disruption of two major terrorism financing campaigns, which used cryptocurrency donations to gather resources for criminal activities. According to the report, more than $1 million worth of cryptocurrency has been recovered from the financial facilitators, who were supposedly operating unlicensed money services businesses (MSBs).
The investigation led to the largest-ever single seizure of a terrorist organization’s cryptocurrency accounts (more than 300) and was aided by Chainalysis tools. Officials released information about the operations of both terrorist organizations and pointed out BitcoinTransfer, a cryptocurrency exchange based in Idlib, Syria, as the gateway to the illicit financing activities.
The seizure also revealed more information about the infrastructure of Al-Qaeda’s terrorism financing. According to the report, they launched a cryptocurrency-based scheme for receiving and laundering donations for terrorism activities using multi-layered transactions to obfuscate the movement of these donations to a central hub of addresses. From there the funds were then redistributed to individual groups.
It was reported that, since BitcoinTransfer started its illegal activities in late 2018, the organization managed to acquire more than $280,000 worth of Bitcoin through the MSB.
What’s even more noteworthy, the report stated that the military wing of Hamas, The Izz ad-Din al-Qassam Brigades (AQB), supposedly orchestrated their donation campaign in three stages, with the third raising 2.39 BTC over 124 transactions. In addition to receiving these donations through the AQB-controlled addresses, the organization used a Gaza-based MSB to launder the digital assets and convert them to cash.
“Terrorist networks have adapted to technology, conducting complex financial transactions in the digital world, including through cryptocurrencies. IRS-CI special agents in the DC cybercrimes unit work diligently to unravel these financial networks,” said Secretary of the Treasury Steven Mnuchin. “Today’s actions demonstrate our ongoing commitment to holding malign actors accountable for their crimes.”
The al-Qassam Brigades claimed that Bitcoin donations were “untraceable” and assisted criminals in showing them how to better cover their tracks while sending the digital assets. Law enforcement agencies not only traced the donations back to the US-based individuals who initiated them, but also seized their accounts and executed search warrants.
- The prosecution tried to paint FTX’s founder as someone who deliberately deceived his customers to get rich, and noted that he directed all activities that led to the failure of the company.
- The defense’s claimed SBF was an entrepreneur whose plans simply “didn’t work out”, and tried to cast the blame for Alameda’s downfall to its former CEO Caroline Ellison.
Shutterstock
- Sam Bankman-Fried’s legal counsel had claimed he should not be charged with any crimes involving FTX as it was not regulated in the U.S., only FTX.US was.
- The DoJ said the claim was irrelevant as SBF was charged for violating existing laws for misappropriating customer assets.
- SBF’s legal team argued that the former FTX CEO did not intend to tamper with the witnesses, and that the DoJ’s request was based on “thin” factual grounds.
- The DoJ filed a motion last week requesting to dismiss SBF’s bail, alleging that he shared Caroline Ellison’s personal diary with the New York Times in order to intimidate her.