Bitcoin's anonymity, availability and the ease with which unsupervised international money transfers can be achieved have made it the favored means of financing for terrorist organizations including ISIS. "Globes" can reveal that an investigation conducted by Israeli blockchain intelligence startup Whitestream has found that on the day prior to the Easter bombings in Sri Lanka, there were exceptionally large transfers in the bitcoin wallets that ISIS uses to raise contributions. Militant Islamic terror group ISIS took responsibility for last month's Sri Lankan bombings, which claimed the lives of over 250 people.
Whitestream found that on the day before the bombings, there was a sharp rise of hundreds of percent in the bitcoin balance held by CoinPayments, a company through which donations to ISIS are changed into bitcoin from regular currency. On April 20, the day before the Easter attacks, the balance in the main wallet of CoinPayments rose from just $500,000 to $4.5 million.
The following day on which the lethal attacks took place, the wallet's balance dropped back to $500,000, the same as the average daily monthly balance during the previous nine months. CoinPayments is a commercial company registered in the Cayman Islands and operating out of Canada, which allows its customers to receive cryptocurrency payments and convert them into dollars.
Earlier this week, ISIS released a video in which its leader Abu Bakr Al-Baghdadi was seen for the first time in five years in which he briefs the terror organization's activists about the hit taken by ISIS in Syria and links it to the attacks in Sri Lanka.
Whitestream said, "In the past two years, ISIS has been running a mass funding campaign to raise donations in bitcoin. The aim of the campaign is to contribute to the organization's technological division, which deals with the media, advertising and computer infrastructure sectors. The main efforts are carried out through a dedicated website. The domain address is frequently changed to prevent tracking by authorities around the world."
"Hamas also converts money on the same platform"
Whitestream, founded by Itsik Levy and Uri Bornstein, has developed software to decode the behavior of blockchain users based on the dispersed data on which bitcoin relies. The software is designed for agencies seeking to prevent money laundering and financing terror using cryptocurrency.
In investigations carried out by Whitestream over the past six months, it has managed to monitor several bitcoin donations to ISIS including the financial movements on the day before the Sri Lankan bombings.
Whitestream said, "CoinPayments admits that there wallet was involved but denies that it is connected to ISIS. It's possible that the company is not aware about the usage of their wallets, erhaps because ISIS uses straw companies in order to transfer the money.
Whitestream adds, "This is not the first time that the name of CoinPayments has been connected to a terrorist organization. Last February, we saw that Hamas also sent some of their donations that they had received in bitcoin to this platform, probably in order to convert it from regular money. Terrorist organizations are in the habit of exploiting unregulated commercial platforms and work through them. Whitestream works with Israel's Ministry of Defense's National Council for Fighting Terror Financing is order to thwart and halt these money transfers."
Levy told "Globes" about the process by which Whitestream identifies usage by ISIS of a bitcoin wallet. "Firstly we identified a certain bitcoin address that received several donations at different times, and we succeeded in verifying that two of the donations came from the address that was presented on ISIS's donations website. Even though the amount on this address was only several dollars, through this wallet we were able to identify that ISIS collects the donations via CoinPayments. This address is just a junction, which reveals the link between CoinPayments and ISIS's donations. Our assumption is that the terrorist organization probably possesses many bitcoin addresses through CoinPayments, with every donation sent to a different address. On the day before the Sri Lanka terror attacks we identified two relatively big transactions at this address with bitcoins worth about $9,800."
Levy said that it is just a matter of time until Hezbollah in Lebanon's starts raising money through bitcoin in the way that ISIS and Hamas do.
Three months ago, Whitestream uncovered how Hamas uses the Coinbase cryptocurrency exchange in the US, the largest such exchange, to convert cryptocurrency donations into money. It now seems that ISIS is using a similar method.
Published by Globes, Israel business news - en.globes.co.il - on May 2, 2019
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