Fortune recently reported that Binance, the world’s largest cryptocurrency
exchange, has responded to more than 47,000 law enforcement requests this year
but distinguished itself by proactively sharing intelligence with Central Asian
law enforcement authorities that led to the capture and arrest of a
high-ranking member of ISIS-Khorasan Province (ISIS-K) in Istanbul.
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Tech & Terrorism: World’s Largest Cryptocurrency Exchange Uncovers ISIS-K
Terror Funding Streams
(New York, N.Y.) — Fortune recently reported
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that Binance, the world’s largest cryptocurrency exchange, has responded to
more than 47,000 law enforcement requests this year but distinguished itself by
proactively sharing intelligence with Central Asian law enforcement authorities
that led to the capture andarrest
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of a high-ranking member of ISIS-Khorasan Province (ISIS-K) in Istanbul. The
firm claims to have built a team of cybersecurity experts that monitored a
pro-ISIS Telegram channel to locate and analyze a crypto wallet address used by
the ISIS-K leader to receive donations. Binance reportedly enlisted assistance
of a crypto forensics firm and the National Bank of Tajikistan to investigate
terror financing, demonstrating the complex layers of government and private
sector cooperation that must take place to proactively identify and stamp out
covert terror financing through cryptocurrency.
Following the arrest of the ISIS-K official, the National Bank of Tajikistan’s
financial monitoring department issued astatement
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pledging “close collaboration” with industry players “to combat criminal
activities and build a safer cybersecurity space in the region.”
Binance’s discovery follows a year of tumultuous press for the cryptocurrency
industry. Far-right groups utilize privacy coins likeMonero
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to crowd-fund their agenda, and ISIS groups across Tajikistan, Indonesia, and
Afghanistan leverageTether
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circumvent transnational banking. The myriad options throughout the broader
cryptocurrency world pose ongoing systemic challenges for governments and law
enforcement authorities to effectively stay ahead of the latest trends in
crypto financing of terror activities and dissemination of propaganda to incite
violence and attacks.
Earlier this year, CEP Senior Director Dr. Hans-Jakob Schindler
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the critical shortcomings present in the regulatory framework,saying
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,
“While regulators and policymakers dither and try to decide if
cryptocurrencies have a future in the economy, early adopters, including
terrorists and violent extremists, exploit a law enforcement blind spot. The
ease by which money laundering and terrorism financing occur with
cryptocurrencies and the more dangerous privacy coins are becoming a security
threat of our own making through bureaucratic inaction.”
Global governments and regulatory bodies have struggled to keep pace with the
rapid technological growth and expansion of crypto and blockchain technologies
since its inception in 2009. Following public pressure, some in the private
sector have taken limited action. While it is an encouraging sign that Binance
has begun to interdict the misuse of its services to a certain extent, this
only occurred after the exchange was undersustained pressure
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addition, asregular
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U.S.indictments
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demonstrate, this technology remains of interest to terrorist groups,
including global terrorism networks such as ISIS, presenting a range of issues.
First, the inconsistent global regulatory
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environment for cryptocurrencies hampers effective law enforcement cooperation
and allows malign actors, such as terrorists, to hop between jurisdictions to
avoid prosecution. Secondly, addressing new technologies such as tumblers,
mixers, and “privacy coins” that obfuscate transaction paths of cryptocurrency
transactions and encrypt user data would require additional support and
cooperation from the private sector—something that continues to be the
exception. Finally, decentralized wallets and exchanges require new regulatory
concepts as the financial intermediary is eliminated by such freely available
shareware.
These complex and interlinking challenges would require that existing standards
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developed by the Financial Action Task Force (FATF) are implemented globally
in an uniform manner. Furthermore, private sector stakeholders should begin
prioritizing preventing the misuse of their systems over profits.Guidance
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in this regard has also been developed but remains ignored by many in the
industry.
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