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Crypto-Fascists: Cryptocurrency Usage by Domestic Extremists

Extremists have increasingly sought ways to obfuscate their identity to make tracing cryptocurrency payments more difficult, adopting protocols like “mixing” or “coinjoining” to hide ownership of their funds.

A new report released by the Foundation for Defense of Democracies (FDD) reveals how America’s far-right domestic extremists fundraise through cryptocurrency.

The report, by Dr. Daveed Gartenstein-Ross, CEO of Valens Global and a senior advisor to FDD, and Varsha Koduvayur, an analyst at Valens Global, details how domestic extremists have increasingly pivoted to using cryptocurrency as banks and traditional financial providers have halted their ability to monetize hate on their platforms.

In “Crypto-Fascists: Cryptocurrency Usage by Domestic Extremists,” the authors note that white supremacist groups and individuals have raised millions of dollars in cryptocurrency through three major avenues. First, they solicit cryptocurrency donations for content they produce, such as radio shows, podcasts, or video streams. Second, they produce extremism-related merchandise that can be purchased with cryptocurrency. Third, they accept cryptocurrency donations for general support.

The report provides several examples of this activity. Andrew Anglin, publisher of the neo-Nazi message board and website The Daily Stormer, is known to have at least 200 different Bitcoin wallets. Nick Fuentes, host of the white nationalist podcast America First, raised almost $94,000 from cryptocurrency donations on the video-streaming platform DLive. Fuentes also operates a store that sells themed merchandise that can be purchased with the cryptocurrency Litecoin. The National Socialist Movement, which has called for all non-whites to be forcefully removed from the United States, accepts donations in Bitcoin. And Jason Kessler, an organizer of the highly controversial 2017 “Unite the Right” rally in Charlottesville, solicits donations for his legal defense fund in Bitcoin.

The authors note that extremists have increasingly sought ways to obfuscate their identity to make tracing cryptocurrency payments more difficult, adopting protocols like “mixing” or “coinjoining” to hide ownership of their funds. The authors also identify ways that extremists could potentially exploit cryptocurrency in the future – such as procuring black market goods or paying for illicit services with cryptocurrency, or utilizing smart contracts, a computerized protocol that automatically executes a contract and thus removes the middleman, to sponsor terrorist activities.

“Domestic extremists have migrated to cryptocurrencies for various reasons, including attempts to avoid paying legal judgments, the need to circumvent a denial of service by more traditional financial institutions (such as PayPal), and general privacy concerns,” the authors write. They continue: “To mitigate the continued threat posed by white supremacist extremists and their supporters, the U.S. government and the private sector should institute policies that target extremists’ use of cryptocurrency,” noting that a whole-of-society response will be necessary to mitigate this risk.

The authors provide several recommendations for policymakers and the private sector to cut off extremists’ cryptocurrency funding flows, which include: increasing U.S. government-led terrorist designations of violent white supremacist groups; supporting global standards for virtual assets to close the gap between countries with strong regulatory regimes and countries with weaker ones; establishing regulations for central bank digital currencies, privacy coins, and other cryptocurrency instruments; and encouraging knowledge- and information-sharing partnerships between blockchain firms and watchdog groups.

Read the report at FDD

Homeland Security Todayhttp://www.hstoday.us
The Government Technology & Services Coalition's Homeland Security Today (HSToday) is the premier news and information resource for the homeland security community, dedicated to elevating the discussions and insights that can support a safe and secure nation. A non-profit magazine and media platform, HSToday provides readers with the whole story, placing facts and comments in context to inform debate and drive realistic solutions to some of the nation’s most vexing security challenges.

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