For Far-Right Extremists, Cryptocurrency Is a Cash Cow

The Canadian government is targeting protestors' ability to finance, even via cryptocurrencies, as the Freedom Convoy protests reach their fourth week. Washington must now do the same for domestic extremists.

Canada's Freedom Convoy protesters are increasingly relying on cryptocurrency donations for support, following GoFundMe's seizure of millions of dollars donated on the website by the convoy. This shift to cryptocurrency is consistent with a pattern observed elsewhere, in which controversial personalities turn to bitcoin after being refused access to standard banking systems to raise donations. In Canada's southern neighbor, a very different population has followed after and amassed millions of dollars in cryptocurrencies over the last few years: America's far-right domestic radicals. This trend is likely to continue in the absence of officials' intervention.

Domestic far-right extremists — including neo-Nazis, white supremacists, and their cohorts — are not new to bitcoin use. Since 2016, analysts have highlighted that domestic radicals have received cryptocurrency donations, with many of these people being early adopters. However, the Charlottesville, Virginia, "Unite the Right" demonstration in 2017 marked a watershed point for America's domestic extremist milieu and its link to cryptocurrency. As banks and other traditional financial institutions began to isolate extremist groups and individuals, many people gravitated toward cryptocurrencies, attracted by its relative anonymity.

Domestic radicals make three significant uses of cryptocurrency. To begin, they accept bitcoin payments in exchange for the content they provide, which includes radio broadcasts, blogs and websites, podcasts, and video streaming. Second, they sell items associated with extremism that can be purchased using cryptocurrency. Thirdly, extremists accept cryptocurrency donations to fund their operations.

Tim Gionet, a.k.a. "Baked Alaska," astonished the world when he livestreamed the Capitol attack on video network DLive. Gionet earned nearly $2,000 from his stream, which included footage of him sneaking into House Speaker Nancy Pelosi's office. DLive accepts bitcoin donations in the form of "lemons," the site's native currency. Viewers purchase lemons—DLive accepts Bitcoin, Bitcoin Cash, Litecoin, and Ethereum as alternative payment methods—and can tip streamers with the lemons.

Nick Fuentes, the host of America First, a podcast dedicated to spreading the philosophy of the new white supremacist movement, also received a sizable paycheck from DLive. Fuentes, the leader of the white supremacist and anti-Semitic group Gropyer Army, raised roughly $94,000 on DLive between April 2020 and January 2021; DLive suspended him following the Capitol attack.

On its website, The Right Stuff, a neo-Nazi media network that broadcasts the shows Fash the Nation and The Daily Shoah, which advocate white supremacy and Holocaust denial, invites its audience to donate in six different cryptocurrencies. And in the aftermath of the Charlottesville protest, The Daily Stormer, one of the most infamous neo-Nazi message boards and propaganda sites, got a donation of 14.88 bitcoins, worth more than $60,000 at the time. (The donation amount itself is a reference to central white supremacist ideas: the "14" refers to the late white supremacist David Lane's 14 words, "We must safeguard our people's existence and a future for white children.") The "88" is an abbreviation for Heil Hitler.) The Daily Stormer is now accepting only Monero, a cryptocurrency that purports to be untraceable—hence the phrase "privacy coin."

Along with his show, Nick Fuentes runs the "America First" store, which offers items, including the aptly named "White Boy Summer" seasonal line. Litecoin can be used to purchase the product. For a more overtly radical shopping experience, shoppers can visit Will2Rise (W2R), the commerce and media arm of the Rise Above Movement, a white supremacist organisation that places an emphasis on street fighting similar to the skinhead movement. W2R takes pride in its "ethical supply chain," claiming that "all products are manufactured in Eastern Europe, ensuring that no other hand touches the process." W2R accepts payment in five distinct cryptocurrencies, including Bitcoin and Ethereum.

Domestic radicals are also discovering that their appeals for assistance — whether general assistance or funds for legal defense — are being met by bitcoin. Jason Kessler, the organizer of the "Unite the Right" demonstration, is currently accepting cryptocurrency donations for his legal defense fund in Charlottesville. On GiveSendGo, a Christian crowdsourcing site, one campaign for Kessler's legal defense offers Bitcoin and Monero, a privacy token, as methods to contribute to the fund.

The National Socialist Movement (NSM) touts itself as "America's Premier White Civil Rights Organization" and, unsurprisingly, pushes for American national socialism. In 2017, a member of the organization attempted to assault black passengers on an Amtrak train. On its website, NSM accepts Bitcoin donations. Similarly, Atomwaffen Division, an accelerationist white supremacist organisation that seeks to incite a race war in order to bring the United States' democratic system to a halt, accepted Monero donations on a website linked with the group. (Atomwaffen formally disbanded in March 2020, though analysts believe it renamed as the National Socialist Order.)

Indeed, Monero donations indicate a growing – and increasingly alarming – trend of domestic radicals attempting to conceal their identities. As investigations into domestic extremism continue to expand, extremists have attempted to block the tracing of cryptocurrency transactions. Along with the rise of Monero and other privacy currencies, radicals have employed techniques to conceal ownership of funds, such as "mixing" or "coinjoining," protocols that allow users to conceal ownership of their cash for a nominal charge.

Domestic extremists are becoming more astute, and it is past time for us to become astute as well. To rein in extremist activity and limit the dangers they bring, radicals' financing sources should be cut off. Fortunately, the US government and private sector may implement a variety of policies that accomplish this under three major lines of effort: expanding designations, establishing laws and standards, and establishing public-private partnerships.

To begin, the United States government should declare violent white supremacist organizations to be terrorist organizations. Although designations are one of the most effective measures available to the US government for disrupting extremists' fundraising capacities, the US has classified only one white supremacist group to far. While US law forbids the government from designating domestic organisations, it can and should enhance designations of violent white supremacist groups with a foreign connection. Additionally, the authority of designations would incentivize bitcoin corporations to divest themselves of recognized entities.

Second, authorities should adopt a variety of measures that would put cryptocurrencies, such as privacy coins and central bank digital currencies (CBDCs), into the legal framework. Regulations would establish a clear, universal set of regulations for how to manage unlawful activities in the bitcoin industry. Regulations for privacy currencies may include tightening reporting requirements for cryptocurrency exchanges that deal in privacy coins. Establishing norms for CBDCs, such as the digital dollar, now — even if widespread adoption takes years — would assist in mitigating radicals' abuse of government-backed digital currencies. By bridging the gaps between regulatory regimes in different countries and providing the cryptocurrency sector with clear criteria for assessing unlawful or suspicious transactions, supporting global standards on virtual assets would also help prevent extremists from exploiting bitcoin.

Finally, blockchain analytical firms and non-partisan watchdog organizations could collaborate through public-private partnerships. This type of collaboration would make use of both actors' instruments in order to generate actionable intelligence. Ultimately, such collaborations would raise awareness about how extremists utilize cryptocurrencies and would enable relevant cryptocurrency companies to gain a better understanding of this usage.

The Canadian government is targeting protestors' ability to finance, even via cryptocurrencies, as the Freedom Convoy protests reach their fourth week. While there are numerous arguments against the Canadian government using such techniques against peaceful demonstrators expressing their rights to free speech and assembly, American extremists who have embraced cryptocurrency have advocated for and even committed appalling acts of violence. Washington must act now.

Source: NationalInterest

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