An analyst says he has found proof that the terrorist organization is using virtual currency to fund its operations.

by Josh Fischer

When software developer Satoshi Nakamoto introduced bitcoin in 2008 as an alternative currency independent of a central authority, funding international terrorist organizations was certainly not part of the original concept. But according to Ido Wulkan, an intelligence analyst based in Tel Aviv and working for a Singapore-based cyber intelligence company, that is exactly what's happening.

Wulkan has uncovered evidence that the so-called Islamic State (ISIS, or ISIL) terrorist group, whose latest brutal execution of a Jordanian air force pilot outraged the world and incited reprisal attacks from Jordanian military, is using bitcoin to fund their terrorist activities. ISIS, reportedly, uses bitcoin to distribute payments to operatives working inside the terrorist organization, according to Wulkan, and accepts donations in bitcoin.

Bitcoin allows financial transactions to be dispersed with little fear that they will be traced and linked back to the payer or payee. Additionally, operating in the dark web makes investigating these cryptocurrency transactions inaccessible to most investigators. It is an esoteric way of doing business, but with bitcoin technology's increasing popularity, what once was merely techno-speak has given way to more familiarity. Increasing press and exposure to bitcoin's alternative transactions gave way to Wulkan's discovery that broke late last month.

Wulkan told HAARETZ that the evidence points to a single transaction that could be a one-time exchange, or maybe a hoax, but he believes this to be unlikely. Terrorist activity on the Internet has been a concern of investigators for some time, for both recruiting on operatives and raising funds for terrorist activity, but in the dark web these concerns get lost in places search engines cannot go. Because of this, Wulkan believes ISIS is using bitcoin for more than just a single transaction.

Wulkan, 25, uncovered his findings by gaining access to an off-grid Turkish forum located in the dark web, a part of the internet that is mostly "dark" to traditional search engines, and filled with difficult encryptions, protocols and applications. This dark web, also known as the deep web, gives users a high level of anonymity, and is where Wulkan found evidence of ISIS using bitcoin.

Terrorist organizations like ISIS can operate with financial impunity using bitcoin. With bitcoin there is no paper trail to link terrorist activities with their requisite funding. Unwittingly, bitcoin technology helps terrorist organizations, like ISIS, to operate outside the lines of traditional, and traceable, financial records. Bitcoin transactions are considered unregulated gaps in the currency market, and these gaps have a potential for criminal activity due to the faceless nature of Nakamoto's alternative system.

Jimmy Gurule, the former undersecretary of the Treasury Department under George W. Bush, told RT News: "Bitcoin is currently not regulated, and so I think that it does present a risk to moving money for criminal purposes. And I think potentially the terrorists could have found a chink in the armor, or could have found a gap in our regulatory system that they may be exploiting."

Gurule also said ISIS differs from terrorist organizations where more intelligence has been gathered, like Al-Qaeda. ISIS is a self-funding organization with money obtained from the sale of oil on the black market. ISIS also uses ransom and extortion to obtain money for its terrorist activities. This money from black market oil sales, ransom and extortion must be filtered in order for ISIS supporters to remain anonymous and free from apprehension.

Josh Fischer is a freelance writer for Networld Media Group, the parent company of Mobile Payments Today and ATM Marketplace. This story was originally published on Virtual Currency Today, a Networld Media Group publication.

photo courtesy futuretrillionaire