2015 has been a tough year for bitcoin's public image.
To start, the Silk Road trial wrapped up with a federal conviction for the creator of the bitcoin-run illegal drug marketplace. The Silk Road proprietor could spend life behind bars all because he had the novel idea to accept bitcoins, given the “untraceable nature” and used the currency to enable the trading of billions of dollars’ worth of illegal drugs.
Not so good for an image. But it gets worse.
Bitcoin has now gotten its name connected with the one organization no one wants even a sliver of connection to: ISIS — the Islamic militant terrorist group that's flooding international headlines for its reign of terror across the Middle East. Bitcoin is the currency once again under fire as some reports indicate the terrorist group is using it to sift funds into the operation.
Bitcoin is said to be appealing to this group given the absence of a paper trail and its unregulated status that makes it more difficult to connect the funding source to the organization it could be funding. The last time ISIS had a connection in the payments world, it shared the name with a mobile wallet company who had the unfortunate fate of having the wrong name at the wrong time. Isis rebranded last year as Softcard after acknowledging the public relations nightmare with its former namesake.
Bitcoin really does seem to be the cryptocurrency that can't seem to escape controversy. Governments don't like it, but there's a large bitcoin community working hard to pitch its worth to society. In fact, The Bitcoin Foundation recently announced a partnership with multiple bitcoin companies to help wage a campaign that focuses on what benefits the foundation believes bitcoin brings to consumers.
“As the ecosystem matures, bitcoin companies are stepping up to the plate," said Brock Pierce, a board member of the Bitcoin Foundation. "We’re excited to join a coordinated and concentrated effort to teach bitcoin to the world’s almost 3 billion Internet users — two-thirds of which are from the developing world."
But it looks like they've got a lot of steps to take before bitcoin gets close to gaining widespread public acceptance and restoring its image among regulators. These new accusations certainly don't help as it's an even a worse reputation killer than the Silk Road, which was “only” tied to an illegal drug ring. This is about terrorism. And it appears — at least if the speculation is accurate — that bitcoins are being used to fuel ISIS funding, then those leading the terrorist group are already quite familiar with the cryptocurrency.
According to a recent RT.com article — which cited Haaretz newspaper, an Israeli news source — an Israeli cyber intelligence analyst said ISIS is using the Dark Web and bitcoins to siphon in fundraising efforts, citing its unregulated nature as the ideal mode of currency. The analyst, who was not named in the report, told the news agency he uncovered evidence that ISIS was "soliciting for bitcoins as part of its fundraising efforts."
In that same article, Former Under Secretary of the Treasury Department, Jimmy Gurule — an international criminal law expert — offered his views on why bitcoin could possibly be used to fund the terrorist group. Gurule said ISIS is a self-funded terrorist group that taps into the black market for funding and, as a result, needs an untraceable thread from the source to the terrorist group for their identity to remain anonymous.
“Bitcoin is currently not regulated, and so I think that it does present a risk to moving money for criminal purposes,” Gurule said. “And I think potentially the terrorists could have found a chink in the armor, or could have found a gap in our regulatory system that they may be exploiting."
In an ATM Marketplace article, author Josh Fischer cites another analyst with a similar theory. In his case, he cited Ido Wulkan, who works for a Singapore-based cyber intelligence company, who recently spoke about the bitcoin-ISIS connection. As the author explains, "terrorist organizations like ISIS can operate with financial impunity using bitcoin," and that's exactly why he said ISIS would turn to the unregulated cryptocurrency as it's known for aiding criminal activity since it makes it difficult to put a face to the name behind a specific transaction. Not impossible, as we learned during the SilkRoad trial, but extremely difficult.
"Wulkan has uncovered evidence that the so-called Islamic State (ISIS, or ISIL) terrorist group, whose latest brutal execution of a Jordanian Air Force pilot outraged the world and incited reprisal attacks from Jordanian military, is using bitcoin to fund their terrorist activities," Fischer reported. "ISIS, reportedly, uses bitcoin to distribute payments to operatives working inside the terrorist organization, according to Wulkan, and accepts donations in bitcoin."
So are bitcoins funding ISIS? We don't know for sure, but more than one analyst certainly seems to suggest there's a link between the two. Either way, being thrown into the ring as being the suspected currency supporting ISIS' fundraising efforts certainly isn’t helping build bitcoin’s public profile – or its affection from regulators.
Bitcoin Tracker | Week 62
Another week, another salacious report about bitcoins. The Silk Road trial has long passed and earned a conviction of its leader, but now the bitcoin namesake is being thrown around in stories about ISIS fundraising efforts. Not exactly the place the cryptocurrency wants to be when its image is already treading on thin ice. How will the bitcoin community respond?
Bitcoin is trading up from last week’s price of $219.05 and is at $237.53 according to the PYMNTS.com Bitcoin Price index.
As always, if you have any news you’d like to share, please send it our way at email@example.com.
On the Plus Side …
The first brick-and-mortar store that only accepts bitcoin for payment has opened in San Francisco. PYMNTS.com interviewed the CEO of the company behind the operation, Purse.io, a few months ago. The CEO explains how his innovation is helping to drive the bitcoin use case.
- Feb. 19, 2015 - Dell is now the largest retailer to accept bitcoin internationally after opening up to accept bitcoin payments for customers in the U.K. and Canada.
- Feb. 19, 2015 – Stripe finally launched support for bitcoin payments.
- Feb. 18, 2015 – The director of "Super Size Me" explored life with bitcoin in a CNN special.
- Feb. 18, 2015 – Canada is looking for a new bitcoin exchange leader after the closing of both CAVIRTEX and Vault of Satoshi.
- Feb. 16, 2015 – The Commonwealth Secretariat is holding a hearing on digital currencies from the 17th to 18th of February to identify how nascent technology might benefit consumers in the developing world.
- Feb. 13, 2015 – Purse.io launched in San Francisco as the only retail shop that only accepts bitcoins.
- Feb. 13, 2015 – A bitcoin-to-precious metals brokerage, Quantified Assets, has a prototype machine set up for consumers to buy gold and silver directly from a Lamassu bitcoin ATM.
On the Dark Side …
Bitcoin marketplaces shut down across the globe and the U.S. Marshall Service announced that it has more bitcoins to auction off after the conclusion of the Silk Road trial. MIT Technology Review is reporting that bitcoin has hit a snag and PYMNTS.com this week detailed the key reasons why bitcoin isn’t ready to disrupt B2B payments.
- Feb. 18, 2015 – The auctions are open again, when the U.S. Marshall Service auctions off another 50,000 bitcoins from the Silk Road bust.
- Feb. 18, 2015 – Bitcoin seems to have hit a snag according to MIT Technology Review.
- Feb. 18, 2015 – Canadian Bitcoin Exchange CAVORTEX ceases business operations after a data breach.
- Feb. 16, 2015 – The U.K. bitcoin marketplace Netagio shut down their exchange trading platform after facing increasing regulatory uncertainty, stagnating prices and increasing security concerns.
- Feb. 15, 2015 – The digital currency exchange BTER announced that they lost 7,170 bitcoins or about $1.75 million in a hack on their cold wallet system and has offered a 720 BTC bounty for anyone who could get it back.
- Feb. 15, 2105 – While it has been debated that bitcoin can shake up B2B payments, PYMNTS.com has identified two road blocks; it’s volatile and there isn’t a complete ecosystem in place…yet.
- Feb. 13, 2015 – The regulatory agency that oversees Canadian financial markets enacted new policies that mandate that virtual currency ATM operators and virtual currency trading platforms must obtain a license.