Examination of the use of digital currency by terrorists in Syria

In recent years, the level of concern in the security community regarding terrorist exploitation of digital currencies has varied. While some entities claim that the threat is underestimated, others suggest that the terrorist adoption of digital currencies is overstated. Ultimately, as many factors can influence the financial behaviors of individuals, networks and groups, it is crucial to recognize that the use of digital currencies is often context specific.

Compared to other topics, publicly available information on terrorist financing is limited because terrorists strive to operate clandestinely and entities countering their activities must protect sensitive details for security reasons. As a result, comments about terrorist mining of digital currencies are often hypothetical, speculative and anecdotal, raising questions about the threat based on limited evidence. Such analyzes can be helpful when consumers recognize the limitations of the work, but research backed by real-world examples can also help piece together a clearer understanding of trends in specific networks and environments. Therefore, this article takes a close look at examples of the use of digital currency in Syria by the Islamic State as well as al-Qaeda and its past and present Syrian-based associates. The authors use publicly available information from a variety of sources to highlight some of the tactics, techniques and procedures adopted by terrorists with interests in the region. For more depth, the article also draws on the authors’ interview with Collin Almquist, Intel Production Manager at Chainalysis, a company providing cryptocurrency data, software, and services to numerous government organizations. and non-governmental (NGOs).

Before delving into specific cases where terrorists in Syria are mining digital currencies, it is useful to review what digital currencies are and discuss why terrorist organizations and their members occasionally use these tools, especially in Syria. Looking at the specific cases in Syria, this article offers some broader observations and reviews examples, highlighting some of the logistical nuances of various regimes. Finally, it concludes with a discussion of what policymakers, practitioners, and scholars can learn about the terrorist exploitation of digital currencies in the Syrian context.

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Sylvia B. Polson