Chainalysis, a blockchain analytics firm, has quashed many major terrorist financing charges using cryptocurrencies, including the recently revealed possibility that ISIS has a $ 300 million Bitcoin war chest.
In a “fact-finding” report released Wednesday, the New York-based company pointed out that the media have sensationalized such terrorist financing allegations involving Bitcoin and other cryptocurrencies.
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Earlier this week, the director of a terrorism-related think tank pointed to the possibility that ISIS has a $ 300 million worth of war chest stored in Bitcoin, as funds of the same amount are lacking in research conducted by the 2017.
“This would be an ideal archiving mechanism until it is needed. If done right, it would be nowhere to be found and unrecognizable to most governments, “said Hans-Jakob Schindler, director of the Counter Extremism Project.
Though the allegations were speculative and unsupported by any solid evidence, many of the major media outlets caught the news with sensational headlines.
“Schindler’s theory is also highly unlikely,” said Chainalysis.
The company stressed that if the terrorist organization “funneled oil revenues into Bitcoin, the volume of trade in regional exchanges and monetary services activities would reflect this flow of funds.”
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Misinformation of the media?
Chainalysis also mentioned the reports on the fundraising campaign for terrorism conducted by the Popular Resistance Committees (PRC) through Cash4PS to raise funds in digital currencies, calling it disinformation.
“We looked at how we used the Chainalysis Reactor to show that if the PRC had raised any money, it would have been substantially less than $ 24 million,” says the fact-finding report.
Another crypto crime report released this year highlighted the involvement of Bitcoin payments to facilitate the Easter Sunday attacks in Sri Lanka carried out by ISIS. However, according to Chainalysis, “media reports amplified the company’s findings.”
“The company … claimed that the balances in CoinPayments’ wallets increased from $ 500,000 to $ 4.5 million just one day before the Easter attacks, but dropped to $ 500,000 soon after the attacks took place. “said Chainalysis.
“However, our analysis suggests that these results are likely incorrect and that both the $ 10,000 transaction and the $ 4 million balance increase were simply internal transactions that are standard practice for a payment processor like CoinPayments.”
Cryptocurrencies are more transparent
Chainalysis, however, is not abandoning the possibilities of terrorist organizations to raise funds in digital currencies. The report pointed out that most terrorist financing campaigns raised less than $ 10,000, indicating limited adoption.
He also explained that with the transparency of blockchains, cryptocurrencies are not an ideal form of illicit deposit of funds compared to fiat and other traditional assets.
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