
Shocking Revelation: $165M in Cryptocurrency Transactions Under Investigation for Possible Ties to Terrorist Group, Says High-Level Official
Federal authorities announced Wednesday the opening of an investigation into potential ties between an international extremist group and several cryptocurrency exchanges that provide banking services to customers from foreign countries. The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) identified approximately millions in suspicious transactions involving digital assets and most of the reporting institutions provided only partial reports. In addition, millions in cryptocurrency transactions went unreported.
Financial institutions have reported $165 million in suspicious crypto transactions that may be tied to Hamas, an international extremist group, according to the U.S. Treasury department that combats terrorism financing.
According to a letter signed by Deputy Treasury Secretary Adewale Adeyemo, the Financial Crimes Enforcement Network (FinCEN) analyzed suspicious activity reports filed between January 2020 and October 2023 and found more than 200 cryptocurrency addresses may have been involved in these transactions. The letter, directed to the leaders of the Senate Banking and House Financial Services Committees, requested support in passing legislation to expand the Treasury Department’s oversight of digital asset transactions.
The U.S. Treasury Department is concerned that as traditional financial services are cut off from extremist groups, they may turn to virtual assets as an alternative funding source. While there is limited evidence of terrorists exploiting cryptocurrencies, there have been instances of such activity. In October 2020, a group of lawmakers wrote a letter to the Treasury Department asking for information on the extent to which Hamas used crypto in their attacks on Israel last October.
In response to this request, the Treasury Department is seeking greater authority to pursue illicit activity in the virtual asset ecosystem, particularly beyond U.S. borders. This would include expanding the coverage of new entities in the virtual asset ecosystem that may be operating in areas of ambiguity with regards to their obligations under the Bank Secrecy Act. Additionally, the Treasury’s Office of Foreign Assets Control may be given the authority to deploy secondary sanctions against virtual asset firms doing business with sanctioned entities.
However, the Treasury Department acknowledges that not all transactions reported as potential terrorist funding may actually be linked to these groups. There is a risk of over-attributing transactions to extremists when only a portion of the reported activity may have constituted such activity. The current analysis is ongoing and seeks to better understand the potential threats posed by cryptocurrencies and crypto services.
In conclusion, while there is limited evidence of cryptocurrencies being exploited by terrorist groups, there is a concern that as traditional financial services are cut off, they may turn to virtual assets as an alternative form of funding. The Treasury Department is seeking greater authority to pursue illicit activity in the virtual asset ecosystem and is working towards clarifying and expanding coverage of new entities in this space.