ISIS affiliates using cryptocurrencies

TRM Labs, a blockchain intelligence platform, recently published a report highlighting the growing use of cryptocurrencies by Islamic State of Iraq and Syria (ISIS) affiliates in Asia.

Significant on-chain connections were established between these organizations and pro-ISIS fundraising campaigns in Syria.

According to a report published on July 21, there is “mounting on-chain evidence” that pro-ISIS networks in Tajikistan, Indonesia, and Afghanistan have used cryptocurrency to facilitate operations over the past year.

Extract from the TRM report. Source: TRM Labs

The preponderance of transactions associated with the cases, according to TRM, involved the use of Tether on the Tron network.

On July 21, the former director of technical crypto advisory at Elliptic, Tara Annison, stated that Tron and Tether were popular assets for illicit use.

She observed that perpetrators were abandoning Bitcoin in favor of stablecoins. Annison explained that decentralized exchanges (DEXs) have deep liquidity and “really good volume,” making it “super easy” to launder money.

The report also highlighted a significant number of individuals using Indonesian-based exchanges to send funds to addresses associated with pro-ISIS fundraising campaigns in Syria.

“Over USD 517,000 was sent in 2022 by individuals using an Indonesia-based exchange to addresses identified by TRM Labs as belonging to pro-ISIS fundraising campaigns in Syria and the local exchanges that facilitate their activities.”

TRM explained that the fundraising campaigns claimed the funds were used to “help free ISIS families held in Syrian camps.”

TRM wrote that all transfers on the Tron network were conducted using USDT in $10,000 increments. In Tajikistan, crypto was used to recruit militants for the ISIS affiliate in Afghanistan, according to the report.

One of the fundraising campaigns, which was active for more than a year, was associated with an address that received roughly $2 million USDT on Tron in 2022.

TRM Labs identified the flow of funds and alerted the exchange used by the group to pay out their funds using blockchain tracing.

The exchange alerted local authorities, culminating in the June 22 arrest of senior ISIS fundraiser Shamil Hukumatov by Turkish authorities.

In the second half of 2022, a media unit affiliated with ISIS’s Pakistani affiliate reportedly began promoting its ability to receive donations.

TRM Labs determined that the addresses controlled by the group had a twelve-month cumulative volume of approximately $40,000.

In a report published on June 28, TRM Labs revealed that the volume of illicit finance involving Bitcoin had decreased substantially over the past seven years.

It was noted that while Bitcoin was once the “exclusive currency” for terrorist financing, by 2022, 92% of terrorist financing was conducted with Tron.