US says takes down militant groups' cryptocurrency fundraising effort

Officials told reporters that they seized about $2 million

Reuters August 14, 2020
Bitcoin fever exposes crypto-market frailties. PHOTO: REUTERS


The US Justice Department on Thursday said it took down efforts by the military wing of Hamas, al Qaeda, and Islamic State to raise funds via cryptocurrency through schemes that included selling bogus Covid-19 safety equipment to US hospitals.

Officials told reporters that they seized about $2 million during the largest-ever US move against the use by militant groups of cryptocurrencies. Authorities also seized more than 300 cryptocurrency accounts, four websites, and four Facebook pages said authorities.

“These actions represent the government’s largest-ever seizure of cryptocurrency in the terrorism context,” the department said in a statement.

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The US Justice Department, Internal Revenue Service, Federal Bureau of Investigation and Homeland Security were all involved in investigations that took down the fundraising schemes.

John Demers, head of the Justice Department’s national security division, said investigators seized around $2 million during the crackdown. During the final stages of their probe, officials said, US agents operated an undercover website mirroring a Hamas website for 30 days.

Investigators said Islamic State’s scheme used a website called to peddle personal protective equipment touted as approved by the US Food and Drug Administration to US hospitals, nursing homes, and first responders. It promoted its alleged wares through Facebook accounts

But the items “were not FDA approved,” said the DOJ statement.

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The website collected payments via PayPal and US credit cards, but never delivered any equipment, investigators said. They said Al Qaeda solicited donations for its scheme via the Telegram app.

Hamas’ military wing, known as the al-Qassam Brigades, in 2019 posted a solicitation for bitcoin donations on its social media page, which it moved to its official websites.

US authorities were able to seize all 150 cryptocurrency accounts used to launder funds, investigators said.

“Nothing was hidden,” said one US official, who spoke on condition of anonymity to discuss operational details.

“They thought they were protected” by the encryption in the apps they used.



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