White supremacist groups in the U.S. have sometimes been funded by crypto, according to a report from the Anti-Defamation League (ADL) that analyzed about $140,000 in transactions connected to 15 extremist groups or individuals last year.
The ADL, a New York-base advocacy group that counters antisemitism and extremism, focused on the movement of bitcoin, and saw that supporters used a wide array of digital assets platforms to get money in the hands of hate groups, though there was no assertion that the money was directly used for illegal action, such as domestic terrorism. And the review suggested the bitcoin received from supporters was often shifted back into the traditional financial system via U.S. banks.
"Extremists have increasingly turned to cryptocurrency due to the mistaken belief that the technology offers anonymity and is impervious to deplatforming," noted the report from the ADL's Center on Extremism, examining how the assets made their way into the hands of white nationalists. "Neither of these assumptions are accurate, but extremists have benefited from the lenient practices of cryptocurrency platforms, which often allow extremists to use their services."
About half of the transactions tracked by the ADL went through U.S. exchange Kraken, with others flowing through Binance, Coinbase and other platforms, according to the report. The biggest recipient was white nationalist publishing operation Counter-Currents.
The ADL recommends the crypto companies "update their policies to explicitly prohibit the use of their cryptocurrency exchanges to fund hate and extremism-related activities." It also suggested regulators should limit tokens that aim to shield privacy.
"Continued vigilance in the cryptocurrency space, as well as other financial technology spaces, and responsible moderation by the underlying platforms, are needed to combat the financial elements of this rise in antisemitism, extremism and hate," the organization concluded in its report.
Exchanges push back
For their part, crypto exchanges argue that they're combating illegality and that cryptocurrency transactions are often conducted in plain sight – unlike in banking.
A Kraken spokesperson said the company is disappointed the ADL wrote its report "without engaging us in any dialogue" about its know-your-customer policies and money laundering protections.
"Kraken is vigilant in enforcing these policies and taking proactive steps to prevent Kraken's services from being used as a vehicle for money laundering, terrorist financing or any other illicit activity," the spokesperson said in a statement.
Similarly, Coinbase Chief Policy Officer Faryar Shirzad responded that the company "does not tolerate any illegal activity – of any size – on or using the Coinbase exchange," adding that "our terms of service make this clear."
Shirzad said that the U.S. exchange is under "clear rules around anti-money laundering and sanctions that apply to fiat and crypto." He said the report erred in its "failure to differentiate law-abiding, regulated US exchanges from offshore companies that have served as major hubs for illegal activity," and he added that case is still the preferred medium for criminals who "want to avoid the transparent nature of the blockchain."
While the crypto firms defended their efforts to stave off illegality, the report didn't make specific accusations about the money funding illicit activity.
Extremist groups also rely on the traditional financial system, from online payments to credit cards to bank accounts, where the transparency the ADL used in its review isn't publicly available. But banning the groups from the mainstream financial network tends to raise questions of censorship.
STORY CONTINUES BELOW
Banks such as JPMorgan Chase & Co. have given large amounts of money to anti-hate groups including the Anti-Defamation League. But the banks' internal programs to review customers who have ties to extremist organizations are difficult to assess from the outside.
