Bitcoin, Paris, and Terrorism: What Did the Media Get Wrong?

As digital currencies are both an emerging payment method and payment technology, governments around the world have been seeking security measures to prevent digital currencies from being abused by cyber criminals and terrorists.

Following the shocking terrorist attacks in Paris, France last Friday, law enforcement agencies and politicians have begun taking proactive measures to strengthen security.

It is worth noting that major global organizations, including the Financial Crimes Enforcement Network (FinCEN), Europol, the Financial Action Task Force (FATF), the G7, and Interpol, have long been very concerned about the regulation of digital currencies because they believe that this new technology may be used by terrorism.

The nuance of the news, which highlights the impact of digital currencies on the Paris attacks, often gets lost in media coverage, just as the European Council and the G7 convened to assess potential risk factors in the global financial system.

Global media reports have become more complicated and even chaotic. Both ISIL and Daesh have been "confirmed" by the media to use digital currencies to provide their operating funds.

FinCEN Director Jennifer Shasky Calvery also emphasized this confusing report in her speech. She directly stated that FinCEN does not believe that digital currencies are more risky than more mature payment methods.

According to American Banker, Calvery said:

“There have been recent public reports that ISIL uses bitcoin and virtual currencies as a way to move money and raise funds, but we are also very concerned about traditional methods of moving money, so I think we need to focus on both areas.”

Such nuanced comments are often rewarded with headlines like “FinCEN Director: ISIL May Use Bitcoin.” Yes, that’s what American bankers do.

In response, the UK Treasury tried to make a more moderate statement. The government agency released a report in October that the possibility of digital currency being used for money laundering is the lowest.

But the report also points out that activities in the digital currency industry should be supervised because such systems have the potential to be used for a wider range of legitimate and criminal purposes.

Suspicious connections

The issue arose last weekend when an industry news outlet raised the question of whether digital currency technology played a role in providing funding for the Paris attacks.

Industry blog NewsBTC has since published an interview with members of the Ghost Security Group (formerly known as the Anonymous US government group) discussing whether IS is using Bitcoin as a means of funding its operations.

Members of the group said IS used cryptocurrencies as a form of income for its activities and mentioned that the group had found multiple Bitcoin addresses affiliated with IS, but did not specify whether the funds were used for the Paris attack plan.

However, when NewsBTC published the article, its title was "ISIL militant linked to France terror attacks controls Bitcoin address worth $3 million."

This headline quickly triggered follow-up reports from other media, including NetworkWorld, PaymentWeek, etc. (Translator's note: After the news reached the domestic mainstream media, it turned into "Hacker Group Launches Cyber ​​War on ISIS and Seizes 3 Million Bitcoin Wallets", which contains a lot of information = =)

In response, a representative of the Ghost Security Team told CoinDesk that the account addresses they found had nothing to do with the "Paris attacks" (please self-contradict the countless headlines).

Furthermore, the representative said that they no longer control the Bitcoin address claimed to belong to ISIL, saying:

"We no longer have full control over this address and they have been turned over to the U.S. government for verification and investigation."

Some observers, including the anti-ISIL Anonymous hacker group known as GhostSec, disputed the Ghost Security Group’s claims, arguing that they lacked verifiable Bitcoin addresses or transactions.

To that end, Ghost Security provided CoinDesk with an image purporting to be from a defunct IS website, but the bitcoin address listed was unclear. The group later said it no longer had the information.

Search engine records from May show the same language on the page, but the Bitcoin address listed has not received or sent any transactions.

Past precedents

Is this the first time the media has attempted to link IS to cryptocurrencies? Not at all.

It should be said that there are often some smart people who will link the relationship between the two together. For example, an article published by Deutsche Welle in September explored the so-called connection between IS and digital currency.

Move the bench and start:

“Islamic State is experimenting with Bitcoin and gold, marking a further step in its ambitions to establish a state… It is clearly adopting Bitcoin’s decentralized technology, and IS will issue its own currency, the ‘gold dinar’. The group is using both currencies, however, likely for different purposes.”

The article was also cited by Beatrice Berton, a junior analyst at the European Union Institute for Security Studies (EUISS), who said:

“Sadaqa (private donations) constitute the main source of income for ISIL, and its supporters around the world are suspected of using digital currencies such as Bitcoin, which can be used by ISIL militants to quickly transfer funds while minimizing the risk of their accounts being detected.”

The article also mentioned that数千美元worth of Bitcoin had been sent to accounts affiliated with IS, with the first transaction in the account occurring in 2012.

The article, which was originally猜测性in nature, eventually sparked a frenzy, with writer Lewis Sanders IV discussing it extensively on his personal Twitter.

As a focal point, Sanders’ report contained a glaring error, as he initially claimed that a Bitcoin address associated with ISIL had received 2000万美元in Bitcoin. Sanders himself acknowledged the error after he published his report.

Sanders IV went on to condemn his reporting by other journalists, writing:

“#BitcoinNewsStation extrapolated false information from my reporting which I do not support and would rather condemn.”

EU 'cracks down' on Bitcoin

Soon after, Reuters launched a second wave of reports. Following the Paris terrorist attacks, the media said that European countries are planning to "crack down" on digital currencies and anonymous online payment methods in order to curb terrorist activities.

According to a draft document seen by Reuters, the EU's interior and justice ministers were due to hold an emergency meeting in Brussels today.

“They will urge the European Commission to propose measures to strengthen controls on non-bank payment methods, such as electronic/anonymous payments, virtual currencies and precious metals trading via prepaid cards,” Reuters said, noting that the draft came from the meeting.

Soon, other mainstream media outlets began reporting on the news. Clara Guibourg of City AM picked up a Reuters report outlining the EU’s move to target digital currencies such as Bitcoin in order to curb terrorist financing.

She wrote in the article:

“This is a setback for Bitcoin, which has been charging ahead in recent months, with the European Union recently accepting it as a currency by granting it VAT exemption. The cryptocurrency’s price has surged by more than 110 percent to over $500 in mid-October, reaching its highest point in 2015, only to fall back just as quickly to $330.”

Regardless of these reports, there was no specific mention of bitcoin or any other digital currency at today’s Brussels meeting. CoinDesk reached out to the European Commission for more details about the meeting, but had not received any new details as of press time.

The EU news came alongside another report, also from Reuters, which said G7 members were seeking to “tighten the reins” on digital currencies in response to the Paris attacks.

Reuters wrote;

“Software-based financial services provided by FinTech companies, including digital ‘virtual’ currencies such as Bitcoin, often operate across national borders, beyond the oversight of security officials.”

The news originated from an article published by Der Spiegel on Wednesday, stating that the G7 intends to expand its regulatory scope to the broader FinTech industry.

Old-fashioned criticism revived

Elsewhere, Bloomberg opinion writer Leonid Bershidsky noted that the EU’s plans to crack down on virtual currencies should be used as a platform to call for the abolition of cash.

“The problem is that terrorists don’t really use digital currencies,” he said. “They still use cash, even though its use has been severely restricted in some countries (such as France). Instead of directing their anger at virtual currencies, governments should now seriously consider abolishing cash.”

"Despite ISIS's notorious hatred of the United States, their financial accounts appear to be kept in US dollars. The terrorist group's revenue comes from greenbacks, whether through old-school oil smuggling, 'taxes' on conquered populations, or trading in stolen antiquities," he continued.

He went on to suggest that the volatility of Bitcoin’s price against other currencies makes the system “risky” for terrorist groups.

“ISIS and their contractors don’t want a means of payment that could lose half its market value in a single day,” he concluded.

Bershidsky's reporting and the opinions of a few people are very different from the reports of the mainstream media, but it is often these inconspicuous reports that can better reflect the truth behind the events.

Original article: http://www.coindesk.com/bitcoin-paris-and-terrorism-what-the-media-got-wrong/
Author: Pete Rizzo, Stan Higgins, Yessi Bello Perez
Compiled by: Satuoxi
Editor: Satuoxi
Source (translation): Babbitt Information