The Deputy Secretary at the US Treasury, Wally Adeyemo, admitted that Bitcoin is naturally positioned as a step away from funding illicit activities. The US leader illustrated that Bitcoin ranks third after PayPal and conventional banking system use in funding illicit activities.
Adeyemo observed that cryptocurrencies are among the alternate channels that terrorist groups such as the Palestine militants Hamas use. However, he illustrated that crypto utilization is in limited scope relative to the more traditional channels.
Terrorist Groups Adopting Evolving Technology to Move Funds
Adeyemo indicated that terrorist groups portray an affinity to locate new channels to move illicit money. As such, terrorist groups likely embrace crypto as a relatively new technology compared to other alternatives.
In his Friday, October 27 address during the public event at London’s Royal United Services Institute (RUSI), he declared crypto utilization as not the majority of the ways to fund the terrorist groups.
Adeyemo noted that crypto usage represents an evolution of how terrorist groups circumvent internationally imposed sanctions. The Deputy Treasury Secretary observed that terrorists had in the past ditched the traditional banking system. In particular, they shifted 2001 to try new digital-based payment solutions such as Venmo and PayPal.
Adeyemo reiterated despite its limited utilization, it does not imply authorities should not ban illicit utilization. Instead, it is a priority for the authorities to consider sanctioning illicit crypto-related transactions.
Adeyemo considers that evolution is sustained among the terrorist groups, with cryptocurrency inevitably the next source. He added that the industry should collectively work with the authorities to avert cryptocurrency usage in funding illicit activities. He urged the audience on the urgency to stop crypto abuse by Hamas and other terrorists.
US Lawmakers Demand Investigation of Binance and Tether Facilitative Role in Illicit Finance
Adeyemo’s pronouncement coincides with a time when the US lawmakers are pushing the Biden Administration and Justice Department to heighten crypto usage for illicit activities.
A review of the previous week’s activities saw a bipartisan group comprising Massachusetts Senator Elizabeth Warren and Ohio’s Sherrod Brown task the top advisors to President Joe Biden regarding their awareness of crypto’s role in terrorism financing.
Senator Cynthia Lummis echoed Representative French Hill’s call for the Justice Department to initiate investigations regarding crypto exchange Binance and USDT stablecoin issuer Tether’s alleged role in enabling illicit activity.
Adeyemo’s tough stance comes after the surprising October 7 attack on Israel staged by the Hamas terrorists. The attack triggered news of the killing spree funded mainly by cryptocurrencies. Blockchain analysts and crypto experts have ruled out such claims by publications and politicians as inaccurate.
Blockchain analytic firm Elliptic issued a detailed account on Wednesday, October 25, ruling out the assertions that Hamas reaped huge volumes of crypto donations. The firm indicated that no evidence exists suggesting that Hamas and other terrorist groups raised crypto worth hundreds of millions. The crypto fundraising by pro-Hamas groups has raised minimal amounts, and the data from Elliptic was misinterpreted.
Treasury Deputy Secretary Warns Against Crypto Mixers
The US Treasury Deputy Secretary delved into the ongoing debate concerning crypto mixers. He admitted that the mixers made it more difficult to trace the crypto fund’s source. The tools are notorious for mixing the coins from multiple users, thus demonstrating how terrorists could leverage the technology to disguise the funds flow innovatively.
Adeyemo explained that the US Treasury, through collective input of federal regulators, would hold the parties developing such tools accountable for failing to prevent illicit transfers. In particular, the mixing tool developers are responsible for deploying preventive mechanisms to avert terrorists’ capability to utilize the innovations.
Adeyemo wondered why the crypto mixers were continuing to run platforms that facilitate Hamas to undertake their horrific and inhumane acts. He restated the US government’s stance that all financial institutions, crypto firms, and stakeholders deploy a mechanism that prevents terrorists from utilizing digital assets.
Adeyemo concluded that failure by the crypto firms and platforms to avert illicit financial flows would compel the US and partners to act.
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