This is important political news because this could be used as an impetus to continue cracking down on crypto and specifically anonymous "privacy oriented" crypto. A woman from Long Island has been accused of using Bitcoin to launder money in support of ISIS. What does this arrest mean for crypto and what are the details of this case? It seems clear to me that governments around the world are terrified of the idea that cryptocurrency could be used for money laundering and specifically focused around these type of scenarios. For example South Korea at least from my outside perspective seems concerned about money laundering due to the tensions between North and South Korea at this time.
Shahnaz is a U.S. citizen born in Pakistan. She lives in the town of Brentwood, N.Y., where she was working as a lab technician in a Manhattan hospital until June, when she quit her job. The government says Shahnaz was detained on July 31 at John F. Kennedy airport as she was headed to Pakistan by way of Istanbul, from where they believe she intended to enter Syria and join ISIS.
So this particular woman is a US Citizen born in Pakistan. She was not born in the United States in particular. She was caught before she could enter Syria and is accused of wanting to join ISIS. This is in my opinion not enough information for us to know whether she really intended to join ISIS but due to her background and the country she visited it is likely she would be detained and questioned just on those red flags. What if she had Bitcoin on her when she was detained and questioned? What if it was a significant amount of Bitcoin at that? What if she also is a Muslim woman?
According to Justice Department court filings, the defendant used more than a dozen credit cards — six of which allegedly were fraudulently obtained — to buy approximately $62,700 in bitcoin and other cryptocurrencies. The government says Shahnaz converted the cryptocurrencies back to U.S. dollars and deposited the funds into a checking account in her name. She also allegedly obtained a $22,500 loan from a Manhattan bank.
This clearly was against the law and they have a case at minimum on the stolen credit cards. It is not unheard of to see people buying Bitcoin on credit but typically it is with credit cards they themselves own. This seems like a case of credit card fraud and also what are the timelines for when she put the money into her bank account? A lot of this is actually very unclear.
My opinion is that it is very very difficult to stop sophisticated money launderers. This woman in my opinion wasn't sophisticated about it. Bitcoin in my opinion is not specifically conductive to money laundering because it has a blockchain which can be traced. Bitcoin may have a certain reputation but it cannot live up to that reputation and the vast majority of money launderers who attempt to use Bitcoin for this purpose in my opinion will make a mistake and have a high probability of being caught. This is not to say there aren't other methods involving cryptocurrency which have a lot probability of getting caught but that what this woman did was both stupid and probably evil.
She was stupid to even try it, and probably evil if it can be proven she was doing this to support ISIS. When I use the word "evil" I am using it in a subjective way to mean against the interest of the United States, it's citizens, and defense of human rights globally. ISIS is known to kill innocent civilians, violate human rights, and anyone who willfully supports that is supporting the opposite of all that is good about blockchain technology in my opinion.
Finally it is very stupid for people to do stuff like this. It damages the reputation and legitimacy of the entire crypto space. Freedom is great but with it comes responsibility. We have to condemn those who have freedom obtained by crypto who then seek to abuse it. If we don't do that then how can we be considered responsible with our increase in freedom? It actually makes the case authorities want to make when these events occur.
References
- https://www.npr.org/sections/thetwo-way/2017/12/15/571099023/long-island-woman-charged-with-using-bitcoin-to-launder-money-to-support-isis
- https://www.newsday.com/long-island/crime/brentwood-money-laundering-islamic-state-1.15455156
- http://www.foxnews.com/us/2017/12/14/long-island-woman-laundered-money-to-isis-through-bitcoin-prosecutors-say.html