The Islamic State has uploaded its first NFT. Experts believe that the terrorist organization Daesh plans to use the blockchain as a propaganda tool and a new means of financing.
The Islamic State, a terrorist organization also known as Daesh, is turning to the non-fungible token (NFT) market. Quoting “former high-ranking US intelligence officials”, the Wall Street Journal reports the existence of an NFT called “IS-NEWS #01” on several digital art exchange platforms. The token has appeared prominently on Rarible and OpenSea.
© Wall Street Journal
The NFT bears the emblem of the Islamic State, namely the Seal of Muhammad. There is also an Arabic text praising the terrorist action against the Taliban. According to the Wall Street Journal, the NFT was posted online by a Daesh supporter. It will be an experiment to “test a new strategy for raising awareness and funding”.
“This is really an experiment in finding ways to make content indestructible,” says Rafael Gluck, co-founder of US research company Jihadoscope, the source of the NFT discovery.
The same netizen uploaded an NFT bomb-making tutorial and a no-smoking warning. Indeed, the Islamic State officially bans cigarettes. NFT IS-NEWS #01 has not yet been exchanged for cryptocurrencies. It’s also not for sale.
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Is the NFT a propaganda tool for Daesh?
Asked by the Wall Street Journal, intelligence experts believe that IS-NEWS #01 is the first in a long series of NFTs praising Islamist ideology. In their view, the blockchain technology on which NFTs are based is the propaganda tool of choice for terrorists. Indeed, blockchain is resistant to censorship. Therefore, it is not possible to erase the works stored there.
“It is as protected from censorship as possible. There is really nothing anyone can do to remove this NFT,” says Mario Cosby, a former federal blockchain and cryptocurrency analyst.
Not surprisingly, the exchanges reacted to the discovery of the NFT. OpenSea, the most famous marketplace in the industry, has removed the user account and NFTs. The platform has implemented a “zero tolerance policy for content that incites hatred and violence.” We also noticed that NFT is not available through the search engine on Rarible.
However, these measures are not enough to stop the distribution of content. Once registered on the blockchain, NFTs cannot be deleted without the consent of the owner. You can only reduce its visibility. Some decentralized protocols, such as the Interplanetary File System (IPFS), are also capable of storing NFTs across multiple nodes (servers). This decentralized approach prevents third party content from disappearing. Moreover, the owner of IS-NEWS #01 took care to register his non-fungible token on IPFS, the Wall Street Journal investigation emphasizes. Therefore, it is impossible to make it disappear.
According to the Wall Street Journal, ISIS officials are seeking alternative funding solutions after the shutdown of several fundraising websites. This is why some proponents are showing a lot of interest in blockchain. Intelligence experts warn that with the help of the NFT, terrorists may have found a new way to accumulate funds right under the noses of the authorities.
Financing terrorism thanks to cryptocurrencies?
Note that the Islamic State has already been using cryptocurrencies to fund itself since the early 2010s. Back in 2015, an analysis showed that ISIS managed to amass a large supply of crypto assets, including bitcoin. In 2015, a portfolio owned by the Islamic State would raise $23 million in one month, according to the German publication Deutsche Welle. A 2019 survey by The New York Times shows that many other terrorist groups also rely on cryptocurrencies. This is the case of Hamas, the Palestinian Islamist movement.
Transactions across most blockchains are easy to track. De facto authorities can easily trace the history of transactions and determine from which wallets the funds were sent. On the other hand, the authorities cannot freeze assets. Unlike money held in a bank account, blockchain cryptocurrencies cannot be frozen or seized by law enforcement.
Thus, crypto assets remain the assets of criminal organizations such as Daesh. However, terrorist financing represents a tiny fraction of blockchain transactions. According to a study by CipherTrace, a blockchain analysis company, illegal activities accounted for only 0.10% to 0.15% of all cryptocurrency transactions in 2021.
Much of the funding for terrorist groups comes through fiduciary currencies such as the dollar or the euro. As Segal Mandelker, former Secretary General of the U.S. Treasury Department, explained in 2019, “Most terrorist groups rely primarily on the traditional financial system and cash to transfer their funds.” For example, the Islamic State finances itself through oil, gas, speculation in the Middle Eastern foreign exchange markets, agriculture, and taxes on the population. In this context, Daesh basically returns money and raw materials.
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