Cryptocurrencies not well suited for terror financing activities: Study

Recently, a paper was presented by the Foundation for Defense of Democracies' Center on Sanctions and Illicit Finance in the US related to terrorism financing.

As per a report in Coindesk, the think tank stated that cryptocurrencies are not suitable for terrorist financing. The report also highlighted how terrorist groups also have had limited success when it comes to raising funds using technology.

Most terrorists, particularly those operating on jihadist battlefields, work in environments that are not suitable cryptocurrency transactions. US regulators would monitor the transactions in real time, due to their proficiency in analysing cryptocurrency transactions.

Terrorist groups who had used cryptocurrency to raise funds include pro-Islamic State websites, a group based in Gaza, a group allegedly connected with Al-Qaeda, and a contractor training ISIS fighters and Ali Shukri Amin, who penned a blog post explaining how ISIS could raise money using bitcoin.

There was a report in 2017 about a fundraising campaign led by jihadists in the Gaza Strip called the Mujahideen Shura Council (MSC), deemed a foreign terrorist organization. The fundraising campaign was named Jahezona (Arabic for "Equip Us") and aimed to raise $2,500 per fighter but ultimately raised only a little over $500 in bitcoin.

FDD also stated that the deposits were made via the now-defunct cryptocurrency exchange BTC-e.

Another group called itself al-Sadaqa (Arabic for "the Charitable Giving"), was connected to Al-Qaeda and tried to attract bitcoin donations and claimed to be raising funds for fighters in Syria and was able to gather about $685 worth of bitcoin.

Another organisation, Malhama Tactical, had gathered less than $100 worth of bitcoin.

However, cryptocurrencies are not expected to displace conventional means of terror financing.