The day that many have feared is finally upon us. A recent event might be cause for concern in the developments of the cryptocurrency world.
See, in the past, there have been various speculations of what would happen when someone was alleged of utilizing bitcoin to launder money and fund terrorist activities, and some governments did make the claim of bitcoin being used in illicit activities.
But over the course of the past few days, we’ve heard of a fresh case, a case that has taken place in the land of the free and the home of the brave, the United States.
An American woman has been arrested on the premise of money laundering via the use of bitcoins. The washed and dried funds were then, allegedly, sent to support the operations and activities of the Islamic State of Iraq and the Levant (ISIS). This is a very serious matter in a post 9/11 world, where these activities draw the ire of the people and politicians leading to swift justice. Yet, the case has just started, so one must see how it plays out and what results are reached in the end.
The Brooklyn-based, New York woman, may be the first case that sets a precedent the Department of Justice and others who are looking to validate their claims that bitcoin only serves an underworld. The woman, a 27-year-old by the name of Zoobia Shahnaz, is accused of sending money over the Islamic State. She was able to do this by taking out loans from a bank, using those loans to purchase bitcoin, converting it back to USD, then wiring these cleaned funds to ISIS. She is accused of taking out $150,000 in loans and laundering it and so is set to face 110 years in prison.
A representative from the DOJ stated:
“…The defendant defrauded numerous financial institutions and obtained over $85,000 in illicit proceeds, which she converted to Bitcoin and other cryptocurrencies. She then laundered and transferred the funds out of the country to support the Islamic State of Iraq and al-Sham [ISIS]”
While the FBI has commented:
“The FBI New York Joint Terrorism Task Force kept this woman from her dangerous and potentially deadly goal. We will do all we can to stop the next person hoping to do the same.”
Exactly how the FBI was able to catch this individual remains a mystery. What sort of methods and tools did they have to know? How did they know that the account that the money was going to would be one that is associated with the terrorist organization? It seems as if they would have had to track this for some time now.
Terrorist Financing and Bitcoin
It’s an interesting matter because in the past the dollar and many other currencies have been laundered and used to finance various operations. These services were offered via large banks such as UBS, JP Morgan, and others, and the methods may have been a bit more sophisticated due to AML and KYC laws. Yet, despite the barriers, all motivated parties involved were able to have their money cleaned, pressed and ready to go. People like El Chapo and the infamous Mexican cartels and various others with regular currencies have benefited from this. Still, most point to bitcoin as the main means of laundering money, as if bitcoin is only existing for to that exclusive use case. This is not so, as we are seeing various use cases for the currency across the board. It is being utilized in countries like Venezuela and Zimbabwe as means of stability. Regulators continue to scoff at the larger use cases and restrict it to the realm of the nefarious.