New Jersey Department of Homeland Security director Jared Maples predicted on Wednesday, January 15, that domestic terrorists will become increasingly adept at cryptocurrencies like Bitcoin.
During a hearing with the U.S. House Financial Services Committee's monetary policy subcommittee in Washington D.C., Maples said domestic terrorists – attackers who live and are U.S. citizens – find value in the security and privacy offered by Bitcoin and other cryptocurrencies.
"They are seeing the effectiveness of being able to hide these movements," said Maples. "As cryptocurrencies become more prevalent, and technology becomes easier to adapt and use, we believe that we will see more of this (its use) in the field of domestic terrorism."
From Hamas to neo-Nazis
The audience focused on how domestic terrorists finance their attacks in general, and did not speak specifically about Bitcoin and cryptocurrencies. However, three of the five witnesses – Maples, finance expert at Congressional Research Service Rena Miller and senior vice president of the Anti-Defamation League (ADL) George Selim – addressed their role in their written and oral testimonies.
Representative Brad Sherman, a longtime skeptic about cryptocurrencies, pressured Maples to cite examples of cryptocurrency use cases in domestic terrorism. "If it works for Hamas, it will also work for neo-Nazis," he said.
Maples replied, "We see evidence that domestic terrorist groups are realizing that foreign terrorist groups, such as Hamas, are operating using Bitcoin due to their cryptography (and) the difficulties in tracking these transactions."
It should be noted that in regions where Hamas and other terrorist groups are more active, Bitcoin is not one of the most popular tools among these groups.
Blockchain against terrorists
Still, government officials have successfully exploited the inherent traceability of Bitcoin's blockchain to find major criminals. Last October, investigators dismantled the world's largest operating child pornography site in the world using blockchain data analysis software.
Maples told the committee in his written testimony that one of these donations occurred immediately after the attack in Charlottesville, Virginia, in 2017: $ 60,000 in Bitcoin for Daily Stormer editor Andrew Anglin. This shows that, contrary to what many people imagine, Bitcoin transactions can be tracked relatively easily.
"We cannot discount the future use of cryptocurrencies as a means of financing acts of domestic extremism in New Jersey and the United States," acknowledged Maples in his remarks.
Selim, the ADL executive, also testified about using Bitcoin to support white nationalists. He cited reports that neo-Nazi Andrew “weev” Auernheimer received huge amounts of donations via Bitcoin, as well as forums by white supremacists on the Internet like Stormfront and Daily Stormer.
However, he acknowledged that cryptocurrency companies like Coinbase apply comprehensive anti-hate policies that prevent customers from transacting in this way. "Cryptocurrencies are not a magical solution to the white supremacists' money transfer difficulties," Selim wrote in his testimony.
Maples also talked about how the US government can preempt criminals and combat the use of cryptocurrencies for illicit purposes. "We have to implement strict supervision," he said, specifying that this would include ensuring that the right people are aware of the risks related to cryptocurrencies, in addition to monitoring the very movements of these assets.
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