TRM Labs Unveils Mounting Evidence of Cryptocurrency Usage by ISIS, with Tron and Tether at the Forefront
In a recent report published by blockchain intelligence platform TRM Labs, alarming evidence of cryptocurrency usage by affiliates of the Islamic State of Iraq and Syria (ISIS) across Asia has been brought to light. The report highlights significant on-chain connections between these groups and pro-ISIS fundraising campaigns in Syria, pointing to the growing adoption of cryptocurrencies for facilitating operations.
The report, released on July 21, reveals that over the past twelve months, pro-ISIS networks in Tajikistan, Indonesia, and Afghanistan have increasingly turned to cryptocurrencies to support their activities. Among the cryptocurrencies, Tether (USDT) on the Tron network emerged as the primary choice for these transactions.
TRM Labs observed that a majority of the transactions related to the cases involved the use of Tether USDT on the Tron network. This is consistent with a presentation by Tara Annison, Elliptic’s former head of technical crypto advisory, who also highlighted Tron and Tether as popular assets for illicit use. Criminals are reportedly shifting away from Bitcoin in favor of stablecoins like USDT, owing to the deep liquidity and high volume offered by decentralized exchanges (DEXs), making it easier to launder funds.
The report shed light on the involvement of individuals using Indonesian-based exchanges to send funds to addresses associated with pro-ISIS fundraising campaigns in Syria. An estimated USD 517,000 was sent in 2022 by these individuals through an Indonesian exchange to addresses linked to pro-ISIS activities. The fundraising campaigns claimed that the funds were intended to support and assist in the release of ISIS families held in Syrian camps. All the transfers were conducted using USDT on the Tron network, in increments of $10,000.
In another instance, TRM Labs discovered that cryptocurrency was used for recruiting fighters for ISIS’s affiliate in Afghanistan from Tajikistan. A fundraising campaign linked to this activity received approximately $2 million in USDT on Tron in 2022. By tracing the flow of funds on the blockchain, TRM Labs identified the exchange used by the group to cash out their funds. The exchange promptly alerted local authorities, leading to the arrest of a senior ISIS fundraiser, Shamil Hukumatov, by Turkish authorities on June 22.
The report also revealed that a media unit associated with ISIS’s affiliate in Pakistan began promoting its capability to accept donations in the latter half of 2022. TRM Labs identified the addresses controlled by this group, which had a total volume of approximately $40,000 over the last twelve months.
These findings are part of a growing concern regarding the use of cryptocurrencies for illicit activities and terrorist financing. It comes after TRM Labs reported a significant decline in illicit finance volume involving Bitcoin over the past seven years, with Tron being used for 92% of terrorist financing by 2022.
As cryptocurrency adoption continues to grow, regulatory bodies and technology platforms are under increasing pressure to address the misuse of these digital assets for illegal purposes. The report by TRM Labs serves as a crucial reminder of the need for vigilance and stringent measures to counter illicit cryptocurrency usage and its potential implications for global security.
