
Terrorists Turn to Bitcoin for Funding, and They’re Learning Fast - sneeze-slayer
https://www.nytimes.com/2019/08/18/technology/terrorists-bitcoin.html
======
dagaci
"a method that makes the donations nearly impossible for law enforcement to
track" -

This is an incredible statement, Bitcoin is a public ledger. It is the very
opposite of anonymous. It is extremely easy for sophisticated governments in
the USA and Israel to identify who has donated. I can imagine these
authorities chuckling at the naivete of the "Terrorist"/"Palestinian
authority" "secret" fundraising effort.

~~~
wruza
Do bitcoin mixers really work, with respect to this? Especially those who
break links through fiat.

If yes, then they may publish a dynamic list of mixers to use, and SoF would
be non-determinable. Mixers may have more problems than usual then, but afaik
they are already banned in all white business bitcoin operations, so probably
not a big deal for them.

Otoh, CIAs could control the pipe by powering some mixers themselves and
promoting them among enemies.

~~~
mikekchar
You can at least trace the money back to a mixer. Large amounts of money being
sent to a terrorist organisation. The money is being mixed by a mixer. Easy to
shut down the mixer. If mixers are being used and they aren't being shut down
it's because it is easy to trace the money through the mixer (or, perhaps the
government doesn't care, but that seems unlikely).

The funny thing is that if the mixer is hard monitor because it is going
through fiat currency, then you never needed BTC in the first place -- you
just launder money through it.

I frequently say this: if you think a news story seems strange, look at what
the reporter has written previously. Newspapers are making it easy these days,
which is awesome. This is Nathaniel Popper's recent work:
[https://www.nytimes.com/by/nathaniel-
popper](https://www.nytimes.com/by/nathaniel-popper) He gets paid to write
controversial stories about cryptocurrency (and impossible burgers :-D ).

~~~
wruza
Hmm, I have a couple of questions on this.

>then you never needed BTC in the first place -- you just launder money
through it.

I’m afraid I don’t understand this part. Their goal is not to launder money,
but to receive funds from “around the world” (and blow up someone). Of course
easy laundering may be profitable^ to criminals, but how are these two
connected here?

>Easy to shut down the mixer.

Easy in which country? How a mixer in any “closed” country could be shut down?
Say DPRK or strong middle east countries who oppose “west world” to be opaque
enough, but not technically aware of these activities (or simply don’t care,
as you mentioned). Couldn’t that basically turn “person X consciously funds
hamas” into “someone in country Y funds hamas as a hidden detail of business
operation”?

^ Our company tried to create a btc-based business in EU. Banks required us to
provide sof for every transaction, including banning any amount from
fraud/criminal lists, and mixers were all in these lists. I doubt that you can
easily launder via well-known, big enough mixers. At least to my
understanding, EU is very aware of grey money that comes from btc market.

------
choeger
There is an interesting dynamic at play here. Western democracies have
arguably created the foundation for developing bitcoin with their highly
functional education systems and uncensored exchange between citizens. They
_also_ created the desire to implement something like bitcoin with their (more
or less) subtle movement towards authority and policing.

Next step, western governments (correctly) identify bitcoin as a threat to
their current policy enforcements. Now we see the narrative spun against
bitcoin as a tool of evil powers and criminals. Sooner or later it will be
attacked more or less directly. Thus, the governments _confirm_ the motivation
for creating bitcoin in the first place to their own citizen. "See, the White
House /wants/ to control us. We /need/ tools like it." You could replace
bitcoin with any other technology that protects privacy btw. be it Tor, GPG,
or whatever.

So what happens now: Will the governments increase the motivation for the
developers of said tools in an endless arms race, creating a vicious cycle,
where governments trigger the development of better and better tools for
criminals? Or will they at some point start to attack the means to actually
implement these tools? Will there be a form of arms control for compilers?
Like a government-controlled app store?

~~~
joes223
It's worth adding that "terrorists" is a fictional organization and merely
means "the bad guys".

------
jbverschoor
Propaganda. They used to turn to dollars. We should ban that currency

------
jesusthatsgreat
Another hitjob on Bitcoin paid for & promoted by old money.

Terrorists using Bitcoin for funding are idiots. They're creating an
undeniable, timestamped treasure trove of digital evidence which is far
simpler to trace and track than any cash transactions.

I would hope intelligence services are trying to lure terrorists in to using
Bitcoin by pushing articles like this as opposed to actually believing that
Bitcoin transactions can't be tracked and can't be used to hunt down funding
sources.

~~~
arcticbull
... promoted by old money.

I didn't know old money was defined as anyone who didn't want to get attacked
by well-funded terrorists. In the future, I'd avoid this kind of conspiracy
theory advocacy as it weakens any argument you staple it to.

AML/KYC and the OFAC list aren't there because the acronyms make you sound
fancy. They're there because society agrees payments should be censorable.

~~~
feanaro
Does it agree? Or is the average person just too uninformed and powerless to
do anything about it, particularly because sinister effects of such procedures
are long-term and hard to see?

After all, Bitcoin and other cryptocurrencies are also a product of society.

~~~
arcticbull
If you don't want to have an OFAC list I suggest you petition your
congressperson and see how far you get. Or take your case to the people! Tell
me, who do you want to pay that you can't right now, because they're
Syrian/Iranian/North Korean?

~~~
feanaro
I don't have a congressperson. I like having privacy in my payments even
though I (to my knowledge) do not fund criminals. I do find that I share this
sentiment with many people I talk to about it.

~~~
arcticbull
Bitcoin payments aren’t private or anonymous, they’re pseudonymous and
consequently if it ever actually catches on beyond the seedy underbelly of
scamming investors, automated deanonymization will be standard, and you will
somehow enjoy even less privacy.

~~~
feanaro
I doubt routine, automated deanonymization will ever be the standard for
Bitcoin, but even if so, there are better alternatives when it comes to
privacy, such as Monero. I have no doubt others will appears too.

In any case, the point is that privacy of financial transactions is a good
thing.

~~~
arcticbull
You say that like it's self-evident, but it isn't. You haven't presented a
compelling argument for why absolute privacy in financial transactions
matters, let alone is an objective good.

However, my argument isn't just against private, it's also against trustless.
Censoring transactions to entities deemed by society as harmful (terrorists,
sanctioned entities) is a good thing. This cannot be implemented with a
trustless system. If Monero were totally private but had a way of determining
if the payees were sanctioned entities, that would be one thing, but it
doesn't. Auditability matters. How can you track down the next Enron if you
can't see their transactions? How can you follow the flow of stolen money?
It's fantasy.

Default-hidden, available on subpoena is the middle ground all law and order
societies have deemed to be the right place to draw the line. You need to have
a solid basis for why this should be thrown away, and how you plan to address
these things.

This feels like a software engineering "this system is too complicated to
modify, let's throw it out and start over; thus solving the problem once and
for all" type deal.

~~~
feanaro
> You say that like it's self-evident, but it isn't. You haven't presented a
> compelling argument for why absolute privacy in financial transactions
> matters, let alone is an objective good.

Well, it works both ways. The same could be said about your position.

I do think privacy should be the default everywhere and I consider this an
objective good. I do not trust centralized entities scrutinizing my life and
deciding what's right and what's wrong, especially since those entities are in
a constant state of flux depending on power games I have no control over.

Society used and continues to use cash for centuries, a method of payment
which fundamentally leaves no trail by itself... And the world did not end.

Auditability can be enforced in the business sector, where it matters the
most. There is no reason my personal transactions need to be auditable by
anyone.

> Default-hidden, available on subpoena is the middle ground all law and order
> societies have deemed to be the right place to draw the line.

Technology like Monero seem to me to be the result of people deciding
otherwise. Monero and similar tech exists and isn't likely going away. How do
you plan to address that?

------
bouncycastle
OMG terrorists!

What next? We must not use knifes for cutting our food because terrorists use
knifes to do bad stuff?

~~~
StreamBright
Literally what is happening in the UK. Not that I agree with this.

~~~
feanaro
What are you referring to? Do you have a source?

~~~
StreamBright
[https://www.gov.uk/buying-carrying-knives](https://www.gov.uk/buying-
carrying-knives)

[https://www.bbc.com/news/uk-47507937](https://www.bbc.com/news/uk-47507937)

[https://thefederalist.com/2018/04/13/britains-knife-
control-...](https://thefederalist.com/2018/04/13/britains-knife-control-bad-
parody-gun-control/)

------
afroboy
When Algeria start their revolution and resistance they were called terrorists
for years till they got their freedom now they are heroes, history just
repeating it self.

------
solveit
Slightly misleading headline. They're remarkably late to turn to Bitcoin, but
they're learning very fast. The body of the article makes this clear.

~~~
tumetab1
And that they're learning that Bitcoin is not the best options

> in part by using cryptocurrencies that provide even more privacy than
> Bitcoin.

------
buboard
Wow it's so good that even terrorists are using it? Imagine that, terrorists
are ditching the all-powerful greenback cash for bitcoin. Surely this is bad
for bitcoin

------
arcticbull
Fascinating, so you're telling me, that a permissionless, decentralized,
trustless payments system can be used to pay literally anyone even if the
broader society is being physically attacked by the payees? Truly, I'm
shocked. SHOCKED. It's almost like those characteristics aren't desirable in a
payments system.

------
cf498
And look which 127 time Pulitzer price winner isnt above acting as a
propaganda outlet. Its just sad, the headline is just the cherry on top.

------
unityByFreedom
Bitcoin is more empowering for criminals than for law-abiding citizens, true
or false? The same cannot be said of cash, in my opinion.

~~~
arcticbull
True because generously, the only thing Bitcoin adds above and beyond what you
can do with cash is skirt the law and pay anyone you want even if it's illegal
to do so.

~~~
zaat
This, as well as transferring 2 billion dollars around the world withing few
minuets for a few dollars.

~~~
arcticbull
This is a half-baked talking point. If you're saying a single person can't
send two billion dollars in cash in the current system, then, great, nobody
cares. That's not a problem people have. If you're suggesting international
remittences aren't a solved problem at a small scale, I suggest you do some
research.

Further Bitcoin's wild volatility means that no, you can't send "a few billion
dollars" within a "few minutes" for a "few dollars". To send dollars, you
first need to pay an exchange a 1% fee to buy BTC, wait a few days for it to
clear, pay a BTC transaction fee, wait a few hours for the confirmations, pay
the destination exchange a 1% fee, then wait for that to clear. All in you're
talking a few dollars, a few days, a few percent and huge volatility risk.

Or, you fire up Interactive Brokers and pay mid-market rates for an exchange
with a fee of $20 per million, confirmed instantly. Or TransferWise. Or
Western Union (believe it or not they're pretty competitive).

~~~
zaat
Yes, it is half-baked but still carries a kernel of truth. Most people don't
need to transfer two billion dollars, but they still have issues with smaller
amounts. It is possible to use alternative means, but they will often be more
expensive and less flexible.

It is true that you need to own BTC to send X dollars, but that is true with
regards to any other means - you have to own bank dollars to wire dollars, to
get them you have to convert from your local currency or to deposit your
"real", cash dollar notes to your bank. And depend on where you are, this may
be faster or slower process than converting cash to BTC. Perhaps you are an
American and used to have USD available in the banks, consider then having to
transfer CHF. There are lots of places where you can buy BTC with cash pretty
much immediately. Transferring cash to bank dollars or converting local
currency will often take longer and will be more of a hassle. And if you think
1% is bad, try converting currencies at the bank, your credit card or street
change places.

~~~
arcticbull
Within Europe you have SEPA, its free/instant. Within Canada you have Interac
eTransfer, it’s free/instant. Within the US you have Venmo and Square Cash.

Internationally you have TransferWise, it takes a day or two and costs 0.75%
and carries no volatility risk. Or IB. Or WU. Or myriad other options, there’s
sites to compare rates. Along the USD-INR corridor it’s totally possible to
pay 0% with these services.

You’re dramatically understating the cost and risk of a BTC exchange. It’s 2%
+ $3 + volatility and it moves 10% in days. Or the risk an exchange just goes
under with all your money like the guy who lost $400K trying to do Forex in
Quadriga.

No idea how it works in CH but the majority of credit cards in the US charge
no foreign transaction fees (mid-market rates) and why use a street change
place when you can use an ATM in the foreign country for a low fixed dollar
fee if any.

If you investigated your options you’d realize this problem is already solved
and better.

~~~
zaat
Well, seems like the options you have are better for you. In the market I
operate in credit cards fees are %2.5-3. Street change places are popular
because they are the cheapest option. Using SEPA is expensive and is not
instant (your bank will usually transmit the transaction about a day after you
order it). And anyway, a day or two is far from instant.

I didn't understate the risk of BTC exchanges, I didn't discuss it at all. I
also didn't and wouldn't claim that BTC is flawless or close to that. There
are multiple downsides, risk and usability issues. I only reacted to your
claim that it is only useful for illegal ends.

~~~
arcticbull
> Well, seems like the options you have are better for you. In the market I
> operate in credit cards fees are %2.5-3.

Where, out of curiosity? And is a TransferWise Borderless account an option
for you, to sidestep this?

> Street change places are popular because they are the cheapest option. Using
> SEPA is expensive and is not instant (your bank will usually transmit the
> transaction about a day after you order it). And anyway, a day or two is far
> from instant.

TransferWise remains a risk free option less than 1%. SEPA payments cost the
same as a domestic transfer, often free, or a few cents, and within the Euro
zone there’s no currency to convert. Further they are instant from a network
perspective but banks do all offer processing time guarantees. And while
potentially far from instant at minimum one SEPA transaction is required to
move money into or out of the Eurozone via an exchange so you’re just adding
needless extra steps.

> I didn't understate the risk of BTC exchanges, I didn't discuss it at all. I
> also didn't and wouldn't claim that BTC is flawless or close to that. There
> are multiple downsides, risk and usability issues. I only reacted to your
> claim that it is only useful for illegal ends.

By omitting it you made it seem like a viable option, it’s not. The risk was
left out of the “couple of dollars” quote like a resort fee at a hotel. There
are better, cheaper, faster options. Crypto has no business in the
conversation because they’re so clumsy and expensive.

Imo in a market where better options exist, showing up with a worse one by all
metrics with no path or plan to improve it doesn’t demonstrate its viability
or fitness for purpose. Which means by de facto that this isn’t an example of
a legitimate use case. Why would you use a worse product?

For instance it’s like me showing up and saying for $1000 I’ll fly your money
personally - with a nontrivial risk I’ll get bored and just keep your money.
That doesn’t demonstrate my legitimacy as a money transmitter. Or trying to
sell a typewriter as a computer. Or a horse next to a car dealership. Sure you
_could_ but why?

------
error629
Cryptocurrency can adapt & wallets can be frozen in some instances. Point
being, something can be done. Governments can pick and choose their
cryptocurrency once Swift is replaced by Japan.

Fiat money can't & will always be used for terrorism.

~~~
tuesdayrain
There is no way to reliably freeze BTC wallets as far as I'm aware. At best
you could convince certain exchanges or miners to blacklist them, but even one
that allows a trade or transaction to go through should be enough to swap to a
different currency and lose anyone following the trail. Curious if there's
another way that I don't know about.

~~~
jbverschoor
BTC, no.. if you’re implemented a cryptocurrency using for example ethereum,
you could easily do that, and some actually do so.

~~~
cameronbrown
So something _can_ be done, _if_ the terrorists happen to be using a crypto
with that functionality included. So basically, nothing can be done if they
just use a different network? Or even just the most popular network.

