THE war chest of extremist group ISIS has been decimated by the Bitcoin crash after terror chiefs invested millions in the collapsing cryptocurrency, an expert has said.
The value of bitcoin has plunged to below $4,500 (£3,498) for the first time in a year – a fall which, it is claimed, is hitting terrorists in the wallet.
According to experts, terror groups often use cryptocurrency – a form of digital money that uses encryption to secure transactions – because it is incredibly hard to trace.
And an ex-CIA analyst believes the crash will give some extremists a financial headache.
Yaya J. Fanusie, the director of analysis for Defense of Democracies’ Center on Sanctions and Illicit Finance, said: “For terrorists, there might be a more long-term aversion to using cryptocurrencies as a fundraising mechanism.
“In late 2017, we observed multiple cryptocurrency crowdfunding campaigns by jihadist groups spring up during bitcoin’s huge price spike.
“With the price rise came more media attention on cryptocurrencies and probably a corresponding desire for these extremist groups to diversify their funding with bitcoin.
“We don’t have much insight into all jihadist funding activity, but crowdfunding through cryptocurrencies will be less attractive when the price undergoes a sustained nosedive.
“This is not only for those raising funds, but also for potential donors who would see the diminishing value of their donations if they use digital currency.”
Mr Fanusie’s claims could not be immediately verified by The Sun Online.
Cryptocurrencies use cryptography, a form of secret coding originating from the Second World War, to process transactions securely.
Last month Mr Fanusie warned that criminal gangs and extremists are using “decentralised exchanges” (DEX) to trade cryptocurrencies anonymously.
These groups are attracted to the potential to move hundreds of millions of dollars in value across the world.
Most cryptocurrency exchange businesses are forced to comply with financial legislation, but DEXs do not take custody of users’ tokens and do not verify customers’ identities.
In fact, many proudly advertise this lack of oversight as a selling point.
Mr Fanusie says there are examples of drug cartels and organised criminal gangs in the US, Asia and Europe using cryptocurrencies as part of their money laundering process.
But, he says the crypto crash will not hit these crooks as hard as extremist groups.
He said: “Most criminals using cryptocurrencies probably are not using it to store value, but to move funds quickly and convert them into fiat cash.
“So the impact will likely fall more on everyday speculators than criminals looking for quick transactions.
“Cryptocurrencies can be moved quickly and easily across borders. For cybercriminals, this will remain an attractive feature even at low prices.”
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