The Islamic State is now experimenting with NFTs for funding, propaganda
The first instance of a terrorist-themed non-fungible token (NFT) has emerged, according to a Wall Street Journal report report, with the same emphasis the discovery of an NFT praising Islamist militants for last month’s attack on an Afghan mosque.
The NFT called ‘IS-NEWS #01’ has the emblem of the Islamic State. It was taken down from popular NFT marketplaces like Opensea and Rarible, but is still available on a platform called IPFS.
Reason for concern
Former US intelligence officials believe that this incident indicates a change in strategy by terrorist groups. They believe that these groups are trying to avoid sanctions and restrictions on fundraising activities by exploiting new technologies such as NFTs.
According to researcher Raphael Gluck, this is more likely the terrorist group’s way of testing the waters rather than a collection attempt, given that it was not listed for sale. “It’s very much an experiment…to find ways to make content indestructible,” he added.
Former federal intelligence analyst Mario Cosby told the WSJ that taking down the NFT would be a challenge because of its “censorship-proof” nature.
Terrorist groups rely heavily on propaganda to raise support and funds for their operations, but increasing sanctions have limited opportunities for such activities. Security experts are now concerned that NFTs are emerging as a new way for terrorist groups like the Islamic State to spread the word and collect donations.
The incident has attracted the attention of regulators, which is not good news for the broader crypto industry given that it is already under heavy scrutiny following the collapse of Terra.
Crypto’s role in terrorist financing
This may be the first incident involving NFTs, but the use of cryptocurrencies by terrorist outfits has raised concerns in several countries. Earlier this year, Israeli authorities confiscated 30 crypto wallets from exchange accounts linked to the Palestinian militant group Hamas.
Israeli officials claimed that the seized accounts were allegedly used by Hamas to finance terrorist campaigns against their country.
However, according to a report of Coinbase, transactions related to terrorist detection make up less than 0.05% of all illicit crypto volume.
The round table conference for the financial sector’s innovation policy held of the US Treasury last year noted the role of cryptocurrencies as a “tool for financing terrorism.” It asked lawmakers and regulators across the panel to work together on policies that would limit the use of crypto in, among other things, terrorist financing.
Earlier this year, the EU adopted new legislation in an attempt to strengthen the European framework to combat illegal transactions. Under the new law, crypto transactions will be held to the same standard as traditional money transfers in terms of traceability to prevent terrorist financing, money laundering, etc.
