Bitcoin becomes ISIS's medium of storage

Author: GTong Image source: Dazhi

The hacker group Anonymous has just announced that it will track the information of ISIS members and launch attacks on their accounts. In addition, a group of technicians immediately claimed that Bitcoin accounts have become an important financing channel for terrorists.

In an interview with Kronos Advisory, a national security consulting firm, members of the Civilian Counter-Terrorism Hacker Group (a group of computer hacker activists) and co-founder of the company, Michael K. Smith II, said that ISIS has begun using multiple Bitcoin accounts to operate funds, with one account alone having $3 million worth of Bitcoin.

Smith said that the civilian anti-terrorist hacker organization wanted to advance the development of the world's anti-terrorism cause, but government officials did not pay attention to their words and actions at all, so the organization had to ask him for help.

Smith also said that U.S. counterterrorism officials are concerned that ISIS is using a variety of financial instruments, including Bitcoin, to make money and, further, access the market. A Treasury spokesman said that unless the government takes public action to deal with terrorist Bitcoin incidents, the Treasury will not comment on the relevant account incidents.

In fact, Bitcoin is an unregulated and untraceable online currency that cleverly circumvents the traditional banking system. In addition, it may become a placeholder for terrorist assets in exchange for money, so Bitcoin has become the radar of government departments. The Bitcoin website bitcoin.org has also stated that the receipt and remittance of virtual currency is convenient for everyone.

“Transferring Bitcoin internationally is as easy as walking down a street and sending money. When you transfer funds internationally, you don’t have to wait three business days like you would to transfer money from a bank, you don’t have to pay additional fees, and there is no maximum or minimum transfer limit.”

Bitcoin is recognized as the most widely used currency in the world. It can be used for personal transfers without the intervention of a third-party financial institution. Although Bitcoin was established together with virtual currencies, these digital currencies can be exchanged for real money or goods.

Members of the civilian terrorist hacker group said that ISIS's virtual currency accounts for 1% to 3% of its total income, which is approximately between $470,000 and $1.56 million. The Ministry of Finance stated that the main sources of ISIS's income are robbery, extortion, oil sales, kidnapping ransoms and overseas donations, and its estimated annual income can reach $468 million to $520 million.

In fact, terrorist attacks don't cost much, and even large-scale attacks can cost very little. The 9/11 Commission said that the 9/11 attacks in New York and Washington cost only $400,000 to $500,000 from planning to execution.

Civilian terrorist hacker groups insist that although ISIS's Bitcoin accounts are very suspicious, they have no direct connection with the Paris attacks, so they say the terrorists have found another way to transfer assets that is not easily detected.

"Bitcoin is designed to be decentralized, so any player around the world can contribute to its development, and bitcoin can be transferred seamlessly through anonymous digital wallets," said Juniper Research, a company that analyzes trends in online markets.

Morgan Wright, a senior staffer at the Center for Digital Government and a cybersecurity expert, said terrorists are increasingly looking to 21st century technologies to move assets and manage funds.

Wright said: "Of course, terrorists need to be anonymous when transferring funds. Since 9/11, countries have been very good at tracking the financial activities of terrorists. Terrorists have also found new ways to transfer assets, and this new way seems to be achieved through Bitcoin."

U.S. government officials are increasingly concerned about the unregulated financial system of Bitcoin, and the country has begun to apply anti-money laundering regulatory mechanisms to this online currency. Companies that issue or circulate Bitcoin must keep all transaction records, and transactions exceeding $10,000 must be reported to relevant departments.

Some states in the United States have also enacted laws to regulate Bitcoin transactions. New York has recently established a regulatory framework, and California will also have its state government regulate Bitcoin transactions next year. A Treasury official told Fox News: "The U.S. government has made a broad alliance with other countries in the world to destroy ISIL's finances and is working hard to become part of the international financial system."

However, few other countries have yet to develop specific regulations to govern the use of Bitcoin. It is expected that by 2017, the European Commission will develop regulations to regulate Bitcoin transactions, which will inevitably affect all EU countries.

Meanwhile, Bitcoin is becoming more mainstream. After listening to donors and consulting financial advisors, Fidelity Investments announced last week that its charitable funds can be donated in the form of Bitcoin. Last year, online retaileroverstock.com began accepting Bitcoin payments. Other companies that accept Bitcoin payments include Dell, Microsoft, Expedia (the world's largest online travel company) and DISH Network (a satellite provider).

According to Juniper Research, there were 1.3 million Bitcoin users last year, and it estimates that by the end of 2017, there will be 4.7 million Bitcoin users.