Bitcoin has found a new champion other than the globe-trotting, party loving Winklivoss brothers. This champion of the digital monetary storage and transfer methodology acts in a little more aggressive manner than the typical activist investor hedge fund and is a little more concerning on the world stage as well.

Bitcoins Fraud

ISIS finds Bitcoin attractive

The Islamic State of Iraq and Syria (ISIS), a terrorist group that particularly excels at intimidating its opponent before the battle begins, has taken a liking to Bitcoin.

After literally scaring the pants of the US-trained Iraqi military in the northern half of the country, collecting a broad cache of arms and looting the local financial institutions for nearly $400 million as solders fled or were beheaded, the northern Iraq conquest has made ISIS one of the most well funded and bloody terrorist organizations on the planet.  How does it disseminate this terrorist booty around the globe to spawn the most chaos possible? Bitcoin.

According to a Sky News report, ISIS said on a blog post donations via bitcoin could support a “violent physical struggle” and would be “untrackable” by western spy apparatuses.

Transferring money in the shadows

Bitcoin, unlike cash, is a computer-based payment method that, like PayPal, can be enabled to trigger a tracking of the currency’s usage as it changes hands. But nonetheless a blog post on the ISIS web site titled “Bitcoin and the Charity of Violent Physical Struggle” claims new developments are taking place that enable money transfers in the shadows. The blog post features “Dark Wallet,” a new Bitcoin management company currently deep in alpha development using encryption to make it harder to trace Bitcoin transactions.

“This allows our brothers stuck outside of the ardh Dawlatul-Islam to avoid government taxes along with secretly fund the mujahideen with no legal danger upon them,” the blog post promises. “This system has the potential to revive the lost sunnah of donating to the mujahideen, it is simple, easy, and we ask Allah to hasten it’s usage for us.”

Government debates regarding Bitcoin and its potential global regulation

Debates have raged inside government regarding Bitcoin and its potential global regulation.  The article points out that in February, the Canadian government warned bitcoin could be used for money laundering and financing terrorism.  As you read this the US Department of Defense is engaged in a counter-terrorism investigation of virtual currencies like Bitcoin, Quark and other methods of anonymous value transfer.

The article noted a memo written by the Defense Department’s Combating Terrorism Technical Support Office and first published in May by Bitcoin Magazine the growing threat. “The introduction of virtual currency will likely shape threat finance by increasing the opaqueness, transactional velocity, and overall efficiencies of terrorist attacks.”

Odd that a digital currency which, by its nature can be tracked, is migrating in a direction where it is as opaque as a paper currency.