The Justice Department has seized millions of dollars' worth of cryptocurrency from terrorist organizations, according to court documents unsealed Thursday, in what the government called its "largest-ever seizure of cryptocurrency in the terrorism context."
The Trump administration also said it seized several websites tied to an ISIS scheme to sell fraudulent face masks to the public during the pandemic.
All told the government seized more than 300 cryptocurrency accounts, as well as several websites and Facebook pages, allegedly belonging to members of al-Qaida, ISIS and the military wing of Hamas.
"It should not surprise anyone that our enemies use modern technology, social media platforms and cryptocurrency," Attorney General William Barr said in a statement. "We will seize the funds and the instrumentalities that provide a lifeline for their operations whenever possible."
The fraudulent face masks involved a cyberscam but not necessarily cybercurrency. The department described "a scheme by Murat Cakar, an ISIS facilitator who is responsible for managing select ISIS hacking operations, to sell fake personal protective equipment via FaceMaskCenter.com."
"The site administrators offered to sell these items to customers across the globe, including a customer in the United States who sought to purchase N95 masks and other protective equipment for hospitals, nursing homes, and fire departments," the statement said.
The government seized the websites involved and said it is investigating whether the fraud resulted in any funds being sent to support terror efforts; the websites may also have been used for money laundering, the administration suggested.
The other two cases involved al-Qaida and Hamas soliciting cryptocurrency donations, either by appealing to their supporters or by impersonating charities.
Cryptocurrency's appeal lies, in part, in a potent mix of transparency and anonymity. All transactions are documented in a blockchain, a kind of ledger or record-keeping system that is visible to the public. But instead of being tied to a person's name or identity (such as money in a traditional bank account), the funds are only tied to strings of numbers.
This layer of pseudonymity has made cryptocurrency such as Bitcoin popular for some criminal transactions. But the Justice Department wrote in the newly unsealed court documents that "it is possible to determine the identity of an individual involved in a [bitcoin] transaction through several different tools that are available to law enforcement."
If someone exchanged bitcoin for U.S. dollars using a U.S.-based currency exchange, for instance, they might have revealed their identity in connection to that transaction.
Software that looks for "clusters" of transactions could then identify other bitcoin possessed by the same individual, according to the filing.
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