The House Financial Services Committee has raised concerns over the use of cryptocurrencies to fund domestic terrorism in the United States. In a Jan. 15 hearing, the FSC Subcommittee on National Security, International Development and Monetary Policy has examined how U.S. financial institutions can combat domestic terrorism, extremism and acts of hate. Titled “A Persistent and Evolving Threat: An Examination of the Financing of Domestic Terrorism and Extremism,” the hearing featured five witnesses reporting on various fundraising methods used by organized domestic extremists.
Particularly, the officials and executives have outlined crypto as an important fundraising tool for hate crimes, emphasizing that criminal funding is often distributed via popular social media platforms like Facebook and Telegram.
Jared Maples, Director of the New Jersey Office of Homeland Security and Preparedness, the first witness to address the matter in the hearing, stressed that the U.S. authorities should be closely looking to the use of crypto in funding acts of domestic extremism. Noting that foreign terrorist organizations have used Telegram and Facebook to solicit funding through Bitcoin (BTC) the official listed a number of incidents that involved the cryptocurrency. Projecting that organized domestic extremists will continue to fund their activities via crypto alongside selling counterfeit goods, drug and weapon trafficking, cigarette smuggling, Maples called Congress to not ignore the industry as a source of funding hate crimes in the U.S.:
“We cannot discount the future role of cryptocurrencies in funding acts of domestic extremism, both within New Jersey and across the United States.”
Rena Miller, a specialist in financial economics at the Congressional Research Service, pointed out that combating the financing of extremist groups in the U.S. poses some new challenges due to the emergence of newer online methods of fundraising. In this regard, the executive cited a 2017 study by the Anti Defamation League (ADL) that claims that supremacy groups in the U.S. tend to be decentralized rather than highly organized, often relying on crypto. As the study also outlined the role of social media and crypto for these domestic extremists, Miller suggested that the U.S. government should be collecting and analyzing financial data more extensively. As part of the effort, authorities should have access to data provided on social media and payment processors. She said:
“Cross-cutting issues that span different areas of congressional oversight may become more important; for example, access to data provided on social media sites and payment platforms.”
George Selim, senior vice president of programs at the Anti-Defamation League, emphasized that transactions on the Bitcoin blockchain are still transparent and can be tracked despite its anonymous character. In this context, Selim mentioned Neonazi BTC Tracker, a Twitter bot that posts information related to certain identified Bitcoin wallets. Specifically, Selim noted that Stormfront, the oldest and largest white supremacist website on the Internet, received about $30,000 in Bitcoin prior to October 2017, while white supremacist hacker Andrew Auernheimer received more than a million dollars in the cryptocurrency.
The executive concluded that Congress should fund a significant study into how crypto is used in funding domestic hate crimes. Selim also suggested that the U.S. should create a certain framework that allows platforms that enables crypto-related platforms to track online transactions and prevent the potential for exploitation of their services. He noted:
“New forms of financial products and services, including cryptocurrencies, should be addressed. Analysis should cover challenges as well as opportunities inherent in these new financial products and services for those endeavoring to stop the funding of hate and violence.”
While the U.S. is trying to address all possible terrorist financing loopholes against the backdrop of the disturbing rise of domestic terrorism and hate crimes, some experts claim that crypto is “poor form of money” for terrorists. Back in 2018, U.S. Congress concluded that terrorist groups that attempted to raise funds via crypto have not had great success. Similarly, U.S. nonprofit think tank RAND Corporation said that crypto is not well-suited for the needs of terrorist groups.
Meanwhile, the European Union has recently enforced another important anti-money laundering law that aims to bring more transparency to financial transactions for combating money laundering and terrorist financing. Came into effect on Jan. 10, the European Union’s 5th Anti-Money Laundering Directive has apparently forced some crypto firms in Europe to shut down their businesses, partly due to requirements to disclose too much information about their clients.
3 Big Blockchain Firms Working Together On A DeFi Product That Pays Passive Income
In a special announcement made at the Unitize conference on July 6, Cosmos, Polkadot, and Terra revealed a new DeFi savings product called Anchor that aims to offer dependable interest rates on stablecoins deposits. The companies involved in the creation of Anchor plan to launch it across their respective blockchains at the end of Q3 this year and scale across to other PoS blockchains in the future. Do Kwon, founder and CEO of Terra, explained in a prepared statement:
“While DeFi staples such as Maker and Compound have been revolutionary in creating fully decentralized crypto money markets, the volatility of their interest rates makes them unsuitable to be used as a household savings product. DeFi mass adoption needs the creation of a fully decentralized savings account that offers dependable APR.”
Anchor’s smart contracts receive stablecoin deposits and use a portion of them to acquire staking positions on compatible Proof of Stake blockchains. Users will receive their passive income from these staking rewards. The initial governance for this platform will come from the Interchain Asset Association (IAA), a newly formed organization that sees Zaki Manian of Cosmos, Jack Platts of the Web3 Foundation, and Do Kwon of Terraform Labs collectively steering the ship.
Telegram Is Set To Shut Down The TON Testnet By August 2020
Although Telegram has terminated its blockchain project, Telegram Open Network (TON), in May 2020, the TON test net has been apparently running for almost one year. In a July 6 update, the official TON development group on Telegram announced that it would be discontinuing its support of the test network for TON. Remaining TON validators will be turned off by August 1. In the post, the TON official recommended network participants save all their relevant data and stop their testing processes. Despite the testnet being set to shut down less than a month from now, network participants will still be able to continue their experimentation after the testnet is terminated. In order to do that, users can install their own testnet validators, described in greater detail in three different how-to documents containing guidelines for the Full Node, the Validator, and Test Grams.
Telegram launched the TON testnet for explorer and node software on Sept. 6, 2019. In anticipation of its scheduled Oct. 31 launch last year, the company released an alpha version of an iOS wallet to work with its native token, the Gram. But Telegram’s TON plans were never fully realized, as the United States Securities and Exchange Commission suddenly deemed Telegram’s $1.7 billion ICO illegal in mid-October. After a long-running legal battle with U.S. regulators, Telegram agreed to shut down its TON project, as well as return $1.2 billion to investors in line with a court-approved final settlement. As officially announced by Telegram CEO Pavel Durov, the firm had already reimbursed more than $1.2 billion by June 25.
Brock Pierce Enters The 2020 US Presidential Race
Brock Pierce, entrepreneur, crypto venture capitalist, and child star, has announced his USA Presidential run on Twitter July 5. His tweet stated: “
“I, Brock Pierce, am running for President of the United States of America.”
Pierce’s campaign site states that he is a pioneer digital currency and has raised more than $5 billion for the companies he has founded. Pierce is the Chairman of the Bitcoin Foundation and co-founder of EOS Alliance, Block.one, Blockchain Capital, Tether, and Mastercoin (first ICO). His website, sparse on details, does not say if he is seeking a nomination in a political party or if he is running as an Independent.