In a recent report by the Anti-Defamation League (ADL), a concerning trend has emerged within the realms of cryptocurrency and extremist funding. The ADL, a renowned New York-based organization dedicated to combating antisemitism and extremism, has highlighted how certain white supremacist groups in the U.S. are utilizing cryptocurrencies like Bitcoin for funding. This revelation comes after a detailed analysis of approximately $140,000 transactions linked to 15 extremist groups and individuals in the previous year.
The mechanics of extremist crypto transactions
The ADL’s investigation centered around Bitcoin movements but acknowledged that various digital asset platforms were employed. Notably, the report does not assert that these funds were directly used for illegal activities, such as domestic terrorism. It was observed that the cryptocurrency received was often converted back into traditional financial systems via U.S. banks. This practice underscores a critical point: extremists are increasingly turning to cryptocurrency under the false belief of anonymity and immunity to deplatforming. However, these assumptions are countered by the ADL’s findings, highlighting that these groups still rely on lenient practices of certain cryptocurrency platforms. Significantly, about half of the tracked transactions passed through the U.S. exchange Kraken, with others via platforms like Binance and Coinbase.
Response and recommendations from the ADL
In light of these findings, the ADL has urged cryptocurrency companies to update their policies to explicitly prohibit the use of their exchanges for funding hate and extremism-related activities. Additionally, the organization calls for regulatory measures to limit tokens that focus on privacy protection. The ADL emphasizes the need for continuous vigilance in the cryptocurrency space, advocating for responsible moderation by platforms to combat the financial components of rising antisemitism, extremism, and hate.
Crypto industry’s stance and challenges
On the flip side, crypto exchanges maintain that they are actively combating illegality. A spokesperson from Kraken expressed disappointment in the ADL’s approach to the report, stressing their rigorous know-your-customer policies and measures against money laundering and other illicit activities. Coinbase’s Chief Policy Officer also reiterated the company’s zero-tolerance policy towards illegal activities on its exchange, highlighting the differences between law-abiding, regulated U.S. exchanges and offshore companies linked to illegal activities. These defenses point to a broader challenge: while extremist groups also use traditional financial systems, the transparency inherent in blockchain technology offers a unique vantage point for organizations like the ADL to track and analyze such transactions.
Overall, the ADL’s report sheds light on the complicated relationship between financial innovation and extremism. It raises critical questions about the role of cryptocurrency in potentially facilitating extremist activities while highlighting crypto exchanges’ efforts to address these challenges.