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Crypto currencies – A safe haven to terror funding


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Sources of terrorist funding include, but are not limited to, low – level fraud, kidnapping for ransom, the misuse of the non – profit organisations, the illicit trade in commodities (such as oil, charcoal, diamonds, gold and the narcotic “captagon”), and all digital currencies. Shortly after the latest Gaza flare-up ended last month, Hamas officials boasted to The Wall Street Journal that they had pulled in record donations in cryptocurrencies. The Palestinian militant group Hamas has seen a surge in cryptocurrency donations since the start of the armed conflict with Israel last month, a senior official with the group said, exploiting a trend in online fundraising that has enabled it to circumvent international sanctions to fund its military operations.

The international attention to the recent fighting drew new eyeballs to websites run by Hamas’s armed wing, the Izz ad-Din al-Qassam Brigades, and that surge translated into donations for its military operations. “There was definitely a spike” in bitcoin donations, he said. “Some of the money gets used for military purposes to defend the basic rights of the Palestinians.”

Hamas, which rules the Gaza Strip, is designated by the US, the EU and other Western nations as a terrorist entity. Those sanctions forced it to turn years ago to covert methods of financing outside the international banking system. As the cryptocurrency industry grew, Hamas began capitalising on its ability to make transactions anonymous.

The Hamas official, who spoke on condition he not be named, declined to say how much cryptocurrency the group has received but said its proportion of overall revenue was rising. Last year, US Federal authorities seized more than US$ 1 million in cryptocurrency tied to the al-Qassam Brigades. Terrorist financiers and other criminals use the formal financial system, new payment methods such as bitcoin and Ripple, traditional methods of value transfer such as hawala, trade based money-laundering, and cash couriers, particularly in countries with non-existent or weak national anti-money laundering/countering is the normal norm.

While al Qaeda has used the Internet primarily to spread its propaganda and to rally new recruits, the terrorist group has also relied on the Internet for financing-related purposes. Other Islamist terrorist groups, including Hamas, Lashkar e-Taiba, and Hezbollah have also made extensive use of the Internet to raise and transfer needed funds to support their activities. The Internet’s appeal in this regard for terrorist groups is readily apparent–offering a broad reach, timely efficiency, as well as a certain degree of anonymity and security for both donors and recipients. Unfortunately, while many governments now recognise that the Internet is an increasingly valuable tool for terrorist organisations, the response to this point has been inconsistent. For the US and its allies to effectively counter this dangerous trend, they will have to prioritise their efforts in this area in the years to come.

Most groups and would-be attacks gain their funds by commercial enterprise, using natural resources, multiple small donations, and illegal means like ransomware, extortion rackets, gold smuggling, drug and human trafficking, and illegal weapons trading. Terrorism likes cash, but it may be evolving beyond. Some experts say though Dubai is the world’s biggest hub for gold trade, their production is zero, but gold is taken as ransom and outlet for it is Dubai. Africa mafia is involved in diamonds and gold movements. Who has not heard of the Blood diamond mafia in the diamond and ivory and horn trade?

Nuaymi is also one of several of Qatar-based al-Qaeda financiers sanctioned by the US Treasury in recent years. According to some reports, US officials believe that the largest portion of private donations supporting ISIS and al-Qaeda-linked groups now comes from Qatar rather than Saudi Arabia.

Transferring funds electronically, using the Internet to initiate transactions has become increasingly common through such services as PayPal. Transactions can also be conducted through cellphones in what are now better known as “M-payments.” In countries where the formal financial sector is less than robust, such as in many African countries using the Internet or cellphones to facilitate transfers is a far more attractive and readily available option. Online gambling sites and other similar entities have also made it easier to launder money on the Internet than it was in the past, a practice that terrorist groups have taken advantage of in recent years. While this type of activity could potentially expose them to detection, terrorists like Tsouli are able to mask their identities on the Internet when using these sites.

Hamas has also instructed potential donors on what steps they should take to avoid getting caught. For example, on its Qassam Brigades website, Hamas told donors to use “fake” names when sending e-mails regarding contributions. Hamas also reassured donors that they will use “secure handling” for the donations to the fighters. Hezbollah, likewise, has bragged about their sophistication in using the Internet, particularly in using encryption to protect the communications from detection.

Hezbollah spokesman Ahmed Jabril said that with this “brilliant” encryption, it was possible to “send a verse from the Koran, an appeal for charity and even a call for jihad and know it will not be seen by anyone hostile to our faith, like the Americans.”

Terrorist cells’ involvement in criminal activity is not a phenomenon limited to the Internet, as they are increasingly engaged in crimes across the spectrum. The primary reason is that the Al Qaeda core is no longer providing funding to support terrorist cells and operations. Before 9/11, Al Qaeda funded and controlled operations directly from its base in Afghanistan. The group provided funding for the East Africa embassy bombings in 1998, the 2000 attack on the USS Cole in Yemen, and the September 2001 attacks. Today, the terrorist threat is far more decentralised, and Al Qaeda’s central command is not funding operations as it once did. Left to their own devices, budding terrorist cells have resorted to criminal activity to raise the funds for attacks. The terror outfits are run like a franchise model.

One of the primary ways that terrorist groups are using the Internet to raise funds is through criminal activity. Younis Tsouli, a young British man better known by his Internet code name “Irhabi 007” (translated as “Terrorist 007”) may today be the best known virtual terrorist. As Evan Kohlman, a well-known terrorism expert observed, “Over the space of only two years, he became the undisputed king of internet terrorism.” Tsouli began his “career” by posting videos depicting terrorist activity on various websites. He came to the attention of Al Qaeda in Iraq (AQI), whose leaders were impressed by his computer knowledge and his ambitiousness, and quickly developed close ties to this organisation. Once he proved his bona fides, AQI began feeding videos directly to Tsouli for him to post. At the outset, Tsouli put these videos on free webhosting services, and at this point he had few expenses and little need for the funds. However, these free sites had limited bandwidth and soon came to slow Tsouli down as he ramped up his activities. Tsouli then turned to sites with better technical capabilities, but which also cost money.

Not surprisingly, given his expertise, Tsouli turned to the Internet to raise the money to pay for these sites. Tsouli and his partner Tariq al-Daour began acquiring stolen credit card numbers on the Web, purchasing them through various online forums, such as Cardplanet. By the time Tsouli and his partner were arrested, al-Daour had accumulated 37,000 stolen credit card numbers on his computer, which they had used to make more than US$ 3.5 million in charges. 

Tsouli laundered money through a number of online gambling sites, such as absolutepoker.com and paradisepoker.com, using the stolen credit card information, conducting hundreds of transactions at 43 different sites in all. Any winnings would be cashed in and transferred electronically to bank accounts specifically established for this purpose. In this way, the money would now appear legitimately won, and thus successfully laundered. In total, Tsouli used 72 of these credit cards to register 180 websites, which were hosted by 95 different companies. Tsouli also used these credit cards to purchase equipment for the mujahidin, by having it sent to sites or premises that he and his associate would rent on a short-term basis.

Global media coverage of the fighting drew attention to how the militant organisation had brought hundreds of thousands of viewers to its website, where they were provided instructions on how to contribute under the eyes of the authorities, and offered a QR code to facilitate the transactions.

Selling Bitcoin, received in donations, on a crypto exchange is an easy way to convert them. This is one of the easiest ways you can use to convert Bitcoin into cash. Platforms such as coinbase and kraken enable Bitcoin users to sell the digital currency and withdraw money directly from an account. Investing in crypto can potentially be lucrative, especially if you invest at the right time. If you had invested $1,000 in Bitcoin (CRYPTO:BTC) a decade ago, for example, you’d have more than US$ 15 Million today, assuming you held your investments and didn’t sell during that time period.

All Bitcoin transactions are public, traceable, and permanently stored in the Bitcoin network. Bitcoin addresses are the only information used to define where bitcoins are allocated and where they are sent. Anyone can see the balance and all transactions of any address. The key step in making bitcoin more anonymous is to mix your coins. Often called coin tumbling or laundering, this involves mixing coins from multiple parties. By doing so, you can break the connection between the sender and receiver of the coins, and therefore make transactions practically impossible to trace. In most cases, the cryptocurrency transactions you send will confirm normally without any problems. There are some circumstances, however, that may lead a transaction to be unsuccessful and fail. When this happens, the transaction is considered rejected.

To explain rejected transactions, the purpose of fees have to be explained first. The fees you include with your transactions are collected by miners, which are responsible for confirming transactions on the network. A higher fee will help increase your transaction priority, so it is likely to confirm more quickly. In contrast, a lower fee means it may take longer. If the fee you include is too low, there is a possibility miners will not consider it worthwhile to validate. When this happens, miners will reject the transaction.

How to cancel an unconfirmed Bitcoin transaction? There are two primary strategies one can use to try to cancel the unconfirmed Bitcoin transaction: Replace by Fee (RBF) Double spend using a higher fee is the new option. Some wallets support the RBF protocol allowing you to replace your original transaction with a new one that includes a higher transaction fee.

This would effectively unstick your transaction. To use this feature, though, you would’ve needed to make the original transaction replaceable (usually via an opt-in checkbox). If you’re unable to use RBF, you still may be able to cancel the Bitcoin transaction by double spending with a higher fee.

To do this, make a new transaction equal to the amount of the original one and send it to yourself. Make sure the transaction fee on this is significantly higher than the original one you paid. You may need to use another wallet or specialised software that allows double spending for the transaction to be broadcast to the network.

If all goes well, miners will pick up the new transaction, and your Bitcoin will be back in your wallet. Most miners and wallets have safeguards against double spending, though, so there’s still a large chance that this method may not work. Hopefully, one of these two methods works for you. If not, treat this as an important lesson taught to you by the wild world of Bitcoin.

During and after the Israel war, and especially the Hamas bragging which came in The Wall Street Journal, the rates may have been pulled down such that the money released for terror funding converted into cash reduces. China’s crackdown has also had a dramatic effect on bitcoin mining. The hashrate, which measures the processing power of the bitcoin network and shows how much mining is taking place, on Monday hit its lowest level since late 2020.

Cryptomining is a big business in China, which accounts for over half of global bitcoin production. However, since the State Council’s statement, bans on cryptomining have been issued in major bitcoin mining hubs, including Sichuan, Xinjiang, and Inner Mongolia.

Crypto currency is a dangerous digital currency and must be handled with care and enough thought.
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Rajiv Saxena
Rajiv Saxena
Rajiv Prakash Saxena is a graduate of UBC, Vancouver, Canada. He is an authority on eCommerce, eProcurement, eSign, DSCs and Internet Security. He has been a Technology Bureaucrat and Thought leader in the Government. He has 8 books and few UN assignments. He wrote IT Policies of Colombia and has implemented projects in Jordan, Rwanda, Nepal and Mauritius. Rajiv writes, speaks, mentors on technology issues in Express Computers, ET, National frontier and TV debates. He worked and guided the following divisions: Computer Aided Design (CAD), UP: MP: Maharashtra and Haryana State Coordinator to setup NICNET in their respective Districts of the State, TradeNIC, wherein a CD containing list of 1,00,000 exporters was cut with a search engine and distributed to all Indian Embassies and High Commissions way back in the year 1997 (It was an initiative between NIC and MEA Trade Division headed by Ms. Sujatha Singh, IFS, India’s Ex Foreign Secretary), Law Commission, Ministry of Law & Justice, Department of Legal Affairs, Department of Justice, Ministry of Urban Development (MoUD), Ministry of Housing & Urban Poverty Alleviation (MoHUPA), National Jail Project, National Human Rights Commission (NHRC), National Commission for Minorities (NCM), National Data Centres (NDC), NIC National Infrastructure, Certifying Authority (CA) to issue Digital Signature Certificates (DSCs), eProcurement, Ministry of Parliamentary Affairs (MPA), Lok Sabha and its Secretariat (LSS) and Rajya Sabha and its Secretariat (RSS) along with their subordinate and attached offices like Directorate of Estate (DoE), Land & Development Office (L&DO), National Building Construction Corporation (NBCC), Central Public Works Department (CPWD), National Capital Regional Planning Board (NCRPB), Housing & Urban Development Corporation (HUDO), National Building Organisation (NBO), Delhi Development Authority (DDA), BMPTC and many others.


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