On Tuesday, September 29, 2020, French police arrested 29 suspects during a sting operation. The arrests were made in connection to a network that has been involved in terror financing in Syria. The use of “crypto coupons” were the network’s main facilitator in the movement of money.
Using Crypto to Finance Terror
According to French prosecutors, the suspects have been purchasing crypto coupons, whose references were handed over to jihadists operating in Syria. These coupons were then credited to the Jihadists’ Bitcoin accounts. A statement from the prosecutor’s office stated that the network had been operational since 2019. For the last couple years, purchasing Bitcoin at France Tabacs ( local tobacco shops ) has become more popular in the form of “vouchers.”
Like many other convenience stores, Tabacs provide quick financial solutions such as prepaid debit cards, cellphone vouchers, and BTC vouchers that can be redeemed in electronic wallets. Many investors originally flocked to Bitcoin vouchers when they wanted to invest in Bitcoin, but did not trust online exchanges. At Tabacs, BTC vouchers are usually available in 50, 100, and 250 euro increments.
A New Method of Terror Financing
Using crypto provided the jihadists with numerous levels of anonymity. The plot to use crypto for terror financing was first discovered by a team called Tracfin that works under the French Economy Ministry. Tracfin traces fiscal fraud, terror financing, and money laundering.
The main method of terror financing since 2013 had been facilitated with cash sent to people in nations neighboring Syria. However, this system has been under increased surveillance by authorities globally. As surveillance has grown, the terrorists have begun using more complex and less visible systems.
The investigation into the terror-financing network in France was opened in January when Tracfin detected a complex network of funding being used by French terrorists in Syria. The terrorists would buy crypto coupons in France and then send the details using secure messaging to the jihadists in Syria. These coupons are worth 10 to 15 Euros each. It was the coupons that the terrorists converted into crypto and sold for cash.
According to the prosecutor’s office, hundreds of thousands of Euros could have been sent via the network. These funds were used to fund the activities of al-Qaeda, whose members are still hiding in northwest Syria. Others who could have received the funds are members of the Islamic State, which has been on the run since al-Baghdadi was killed when US special forces raided his house in October 2019.
The statement from the prosecutor’s office stated that Walid F, 25, and Mesut S, 25, who were French jihadists, were believed to have been behind the network. They are suspected to be operating out of Northwest Syria. The two are suspected to be members of Hayat Tahrir Al-Sham, an affiliate of Al-Qaeda. In 2016, the two were sentenced to 10 years in prison in absentia, and there is an interest arrest warrant for them.
How The 29 Were Caught
French police caught the 29 suspects, aged 22 to 66, after they bought coupons worth 10 to 150 euros each on numerous occasions in the past few months from various locations in France. The coupons are sold to the public via licensed tobacco outlets called Tabacs. In France, there are about 24,000 Tabacs. At these Tabacs, there are also small payment services that include cashcard top-ups and money coupons, which do not require buyers to provide any ID.
The use of crypto for terror financing is an ongoing issue in the crypto world. However, authorities have gotten better at tracking these transactions to their sources as the recent arrests demonstrate. It will help to eliminate the notion that crypto is a haven for illegal activity.