Chainalysis Squashes ISIS’ $300M Bitcoin War Chest Claims

Chainalysis, a blockchain analyzer firm, has squashed many major terror funding allegations using cryptocurrencies, including the recently revealed possibility of ISIS having a $300 million Bitcoin war chest.

In a “fact-checking” report published on Wednesday, the New York-headquartered company pointed out that the media sensationalized such terror-funding related allegations involving Bitcoins and other cryptocurrencies.

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Earlier this week, the director of a terrorism-related think tank pointed out the possibility of ISIS having a war chest worth $300 million stored in Bitcoins, as funds worth the same amount are missing in a search conducted since 2017.

“This would be an ideal storage mechanism until it is needed. If done right, it would be unfindable and unseizable for most governments,” Hans-Jakob Schindler, director of the Counter Extremism Project, said.

Though the allegations were speculative and not backed by any solid proof, multiple major media grabbed the news with sensational headlines.

“Schindler’s theory is also highly unlikely,” Chainalysis stated.

The company pointed out that if the terrorist organization “funneled oil proceeds into Bitcoin, trading volume of regional exchanges and money service businesses would have reflected this flow of funds.”

Media misinformation?

Chainalysis also mentioned the reports of terrorism fundraising campaign run by Popular Resistance Committees (PRC) through Cash4PS to raise funds in digital currencies, calling it misinformation.

“We broke down how we used Chainalysis Reactor to show that if PRC raised any money at all, it was substantially less than $24M,” the fact-checking report stated.

Another crypto crime report published this year highlighted the involvement of Bitcoin payments to facilitate the Easter Sunday Sri Lanka bombings carried out by ISIS. However, according to Chainalysis, “media reports amplified the firm’s findings.”

“The firm…claimed that the balances in CoinPayments’ wallets surged from $500,000 to $4.5 million just one day before the Easter attacks but dropped back to $500,000 right after the attacks took place,” Chainalysis stated.

“However, our analysis suggests those findings are likely incorrect and that both the $10,000 transaction and $4 million balance increase were simply internal transactions that are standard practice for a payment processor like CoinPayments.”

Cryptos are more transparent

Chainalysis, however, is not dropping the possibilities of terror organizations raising funds in digital currencies. The report outlined that most terrorism financing campaigns have raised less than $10,000, indicating limited adoption.

It also detailed that with the transparency of blockchains, cryptocurrencies are not an ideal form of illicit fund storage compared to fiats and other traditional assets.

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