The unique secrecy and security of bitcoin and other cryptocurrencies have led to their use by domestic terrorist groups like white supremacists, experts said at a hearing Wednesday for the U.S. House Financial Services Committee.
Jared Maples, the New Jersey Office of Homeland Security and Preparedness Director, said that it was likely that domestic terror groups would increasingly use the services of bitcoin and other similar currencies.
Maples was joined by Congressional Research Service finance expert Rena Miller and Anti-Defamation League Senior Vice President George Selim in predicting that, with the rising prominence and awareness of cryptocurrency, it would be more often used by white supremacists and other such groups.
Rep. Brad Sherman of California, who has long been skeptical of crypto, said “If it works for Hamas, it will work for the Nazis, too.”
Maples said it was clear that domestic terrorists had taken cues from groups like Hamas in using the coin for its secrecy and privacy. He said there had been a $60,000 bitcoin donation to Andrew Anglin, publisher of The Daily Stormer, after the attack in Charlottesville, Virginia.
Selim said noted neo-Nazi troll Andrew “weev” Auernheimer had received great sums of donated bitcoin. So had well-known Nazi internet havens like Stormfront and The Daily Stormer.
Rep. Juan Vargas of California inquired as to how they would balance fighting terror groups while also protecting the privacy of individuals and not intruding in their lives. Maples agreed that it was a concern to be mindful of, saying it was important to “get the processes right.”
In statements provided to Homeland Security, officials outline their thoughts on the matter.
Rena Miller, with the Congressional Research Service, said that there is little in the way of detailed research on the financing of domestic terrorism. The ADL was one of the few public sources, noting in a 2017 study that most groups were poorly funded and decentralized. The study found that they also tended to latch onto new technologies quickly, and that they’ve relied on crowdfunding.
She writes that one tactic that could prove viable is the gathering of financial data for analysis. Evolving technology and new data sets, such as social media information and electronic payments, could address some of the novel challenges of fighting domestic terror.
By expanding data sources examined and increasing the interoperability of systems, it could become easier to identify domestic terrorists.
Lecia Brooks with the Southern Poverty Law Center writes that targeting the funding of domestic terrorists was one of the prime ways to fight them.
She writes that many of them utilize peer-to-peer (P2P) funding, with 69 groups found to be using PayPal to collect money for sales. PayPal received portions of the funds from those transactions.
PayPal’s CEO, Dan Schulman, has spoken out against white supremacy, saying one of the main focuses of PayPal is diversity and inclusion.
Likewise, there were 54 white power bands utilizing Apple’s iTunes, making 70 cents for each downloaded song on the platform.
Former Klansman David Duke had his own YouTube channel, as have other prominent hate group leaders, and Google has placed ads on hate sites, funneling money to them from advertisers.
A campaign by the SPLC to cut off funding to those groups and others like them finally began to catch traction in the years after the shooting in Charleston, South Carolina, where Dylann Roof massacred nine African Americans in a church. Since then, the SPLC has persuaded PayPal and Google to cut off funding to hate groups.
Selim writes that funding levels for hate groups don’t necessarily correlate with the groups’ ability to promote or commit violence, as the costs to purchase weapons are relatively small.
From there, he details the types of funding favored by different groups of domestic terrorists. Anti-government militias, he writes, are mostly self-funded and don’t need outside funds. White supremacists, due to their connections to hateful violence and the threats of de-platforming, have trouble raising funds.
He writes that self-funding is often the main source of money, and due to the low economic status of many hate group members, it doesn’t add up to much. Organizational funding is tough, too, due to the efforts to block PayPal from letting white supremacists send and receive money, but some figures like alt-right idealogue Richard Spencer ask for cash donations in lieu of that.
He recommends that the agencies pursue more rigorous prosecutions of domestic terrorists’ funding sources, and incorporate data from fields such as finance, technology, civil rights and civil liberties, and study new forms of money like cryptocurrency.
But he writes that one way of tracking cryptocurrency use by hate groups would be to locate the bitcoin “wallets” used by extremists, as all transactions involving bitcoin are permanently and publicly stored.
He says payment companies should more stringently enforce policies against hate groups, and broaden policies that may be too narrow.
That could entail making it easy for users to report activity that could be linked to hate groups, increasing transparency on trends of hate groups blocked using their services, auditing on the activity of hate groups and implementing safety teams that track activity possibly linked to hate groups.