- The use of cryptocurrencies in crime has dwindled greatly, with Coinbase putting their use on terrorist activities at a mere 0.05 percent.
- In a surprising development, XRP has become a favorite for a Saudi-led jihadi activist movement and now rivals BTC at 40 percent share.
One of the biggest criticisms that the Bitcoin skeptics have clung to is that the digital currency is a crime haven and is primarily used for illicit activities. This misguided notion has long been debunked, and in its latest report, Coinbase has further proved that this is an outdated criticism. The exchange found that the share of illicit activity has reduced to less than 1 percent, with terrorist financing accounting for about 0.05 percent. Surprisingly, XRP has become a favorite for one specific Saudi-led jihadi movement, Coinbase found.
When the Taliban took over in Afghanistan, there was great concern that the use of cryptocurrencies in terror activities would shoot up. While there was hope that Bitcoin could offer a lifeline for the citizens, with Cardano’s Charles Hoskinson asserting as much, there was also a fear that terrorist groups would become emboldened to turn to Bitcoin to solicit funds from their supporters.
However, Coinbase found that illegal activities accounted for less than a percentage of all digital currency activities. As such, illicit use is no more a concern for the cryptocurrency space than it is for the traditional financial space.
Further breaking down illicit activity, we find that transactions associated with terrorist financing (TF) in 2020 made up less than 0.05% of all illicit volume. As such, terror funding in cryptocurrencies remains extremely low in overall terms.
Hamas, XRP and crackdowns
Coinbase found that Hamas is the terrorist organization that has raised the most money in digital currencies. Hamas is a Palestinian fundamentalist and militant organization that Canada, the U.S, the European Union, Japan and several other countries have labeled as a terrorist organization.
Hamas first began soliciting BTC in January 2018 with a singular BTC donation address. However, in time, it has advanced and uses multiple addresses to try and obfuscate its activities. In addition, Hamas is the only organization that has been consistent in fundraising through BTC. The others, such as ISIS, fundraised for short amounts of time.
One of the most interesting discoveries was the rise in altcoin use by terrorist organizations. Starting in August last year, a number of organizations began accepting ERC-20 donations. The shift was attributed to a Saudi-led jihadi activist movement. Its leader is a Taliban supporter and has advocated for war against Israel, Pakistan and the U.S.
And while ERC-20 token and Ether donations for the movement noted a rise, it was XRP that saw the biggest rise. XRP accounted for 39.7 percent of the donations, less than a percentage point behind BTC at 40.5 percent.