Chainalysis concludes that cryptocurrencies are not an ideal way of storing illicit funds. Sensationalism and misinformation have linked the use of crypto assets to terrorism.
Blockchain analysis firm Chainalysis released a report dismissing the narrative that has linked the use of cryptocurrencies like Bitcoin to terrorism for years.
In its “Fact-Finding” report, published last May 20th, the company states that there was sensationalism in the handling of the information that mentioned the possible use of Bitcoin and other cryptocurrencies to finance terrorism.
This includes the recently revealed possibility that ISIS has a “war chest” investment at USD 300 million worth of Bitcoin. Although this information was not supported with solid evidence, several major media turned the words of Hans-Jakob Schindler, Head of the Anti-Extremism Project expert group, into sensational headlines, according to the Chainalysis study.
The report added that most terrorist financing campaigns raise less than USD 10,000, which indicates that adoption is limited. Besides, if ISIS had converted its oil revenues into Bitcoin, the trading volume of regional stock exchanges and money services companies would reflect this flow of funds.
The firm also reflects on the responsibility of disclosing information on an issue as relevant as terrorist financing. They explain that fake news cannot only misinform people but also harm the reputation of cryptocurrency companies and the industry in general.
Chainalysis adds that media releases have been amplifying the findings linking cryptocurrencies to terrorism. He referred to the focus of the news about a cryptocurrency fundraising campaign, which the Popular Resistance Committees (PCR) led through the financial services platform Cash4PS. In this regard, the study revealed that, if the PRC was raising money, the amount did not exceed 24 million dollars.
When Disinformation Attacks
The firm also verified other crime news associated with the use of cryptocurrencies that were released this year. Said news highlighted payments with Bitcoin to facilitate the Easter Sunday bombing attacks in Sri Lanka which ISIS conducted. However, Chainalysis notes that the media releases were not in line with the actual findings.
The firm’s analysis suggests that those findings are probably wrong. It also indicates that the USD 10,000 transaction, and the subsequent balance increase of over USD 4 million, were only internal transactions that are standard practice for a payment processor.
The document rules out the possibility that cryptocurrencies are being used for storing illicit funds. It clarifies that, unlike cash and other traditional forms of asset transfer, cryptocurrencies reflect transparency. “Each transaction is recorded in a publicly visible ledger. With the right tools, users can prevent bad actors from abusing the system for financing terrorism and other crimes.”
The data provided by Chainalysis coincides with various studies conducted in different countries, which show that cryptocurrencies are not used for criminal activities as often as many think. Even so, many of the news reports that the media usually broadcast tend to highlight this idea.
In 2017, a prestigious think tank from the UK published an article about the apparent relationship between Bitcoin and the groups dedicated to terrorism that still exist today. In the text, it is revealed that such a connection is not as clear as people thought.
By Alexander Salazar
