A recent Bloomberg report revealed that the Islamic State (IS) is allegedly growing its use of cryptocurrencies, including Tether’s USDT stablecoin, to raise and transfer funds globally, with a particular focus on Africa. The Counter ISIS Finance Group, a coalition of nations dedicated to combating the militant group’s financing, revealed these findings. 

Islamic State’s Crypto Adoption

The report notes that while IS has lost control of large swaths of territory in Syria and Iraq over the past decade, it continues to wage “violent campaigns” through affiliates, particularly in Africa. 

The group reportedly still has an estimated $10 million to $20 million in cash and liquid assets, down significantly from its peak of hundreds of millions of dollars. The militants’ Somali branch has emerged as a major revenue generator, accumulating about $6 million through extortion and local taxes.

To combat illicit financing activities, the United States is working with countries such as Italy and Saudi Arabia to form the Counter ISIS Finance Group. 

As Bitcoinist previously reported, the US reached a $4.4 billion settlement with Binance, the world’s largest cryptocurrency exchange, for failing to implement basic anti-money laundering measures to prevent the activities of terrorist organizations, including IS, highlighting the complexity of the issue. 

Tether’s Security Measures

Regarding Tether, the stablecoin issuer has assisted the United States Department of Justice (DOJ) in combating illicit activities and the criminal use of cryptocurrencies. 

They recently froze over $225 million worth of USDT tokens associated with an illicit organization involved in human trafficking and ‘pig butchering’ romance scams in Southeast Asia. Tether utilizes public blockchains that offer transaction traceability, enabling law enforcement to track each action and seize assets associated with criminal activities.

In response to concerns, Tether’s operating company emphasized its collaboration with law enforcement agencies and highlighted the transparency and traceability of its actions. They stated:

With Tether, every action is online, every action is traceable, every asset can be seized, and every criminal can be caught.

Tether’s efforts to combat the criminal use of cryptocurrencies are evidenced by the over $300 million freezing in recent months. The stablecoin issuer has implemented security measures and partnered with Chainalysis to develop a secondary market monitoring tool, underscoring its commitment to protecting the community.

Paolo Ardoino, CEO of Tether, emphasized, “In practice, Tether is the dumbest choice for conducting illegal activities.

The purported rise in terrorist groups’ utilization of cryptocurrencies for illicit purposes has garnered significant attention. However, it is essential to highlight the pivotal role of stablecoin issuers such as Tether in collaborating with regulatory authorities. 

This collaboration is paramount to preserving the integrity of the cryptocurrency ecosystem and effectively combating illicit financial activities associated with terrorist organizations.

Featured image from Shutterstock, chart from TradingView.com