A Pakistani-American woman is facing up to 20 years in prison after she admitted to funding a terrorist organization and for committing credit card fraud to buy cryptocurrencies like Bitcoin. But contrary to reports from around the web, it wasn’t Bitcoin that was used to fund the deadly criminal operations.
27-Year-Old New York Woman Funds ISIS, Commits Credit Fraud
Zoobia Shahnaz, a 27-year old New York hospital technician, has admitted to a Federal Court Judge that she took out a fraudulent $22,500 loan and a number of fraudulent credit cards in order to raise a grand total of $62,000. The raised funds were used to buy Bitcoin and other cryptocurrencies.
In addition to fraud charges, Shahnaz is also accused of wiring $150,000 to fund ISIS operations across the globe.
Shahnaz admitted to the charges as part of a plea deal with prosecutors. Oftentimes a defendant can bargain with prosecutors for a less stringent sentence if charges are admitted to, or information is provided that further’s an investigation or better supports the charges of the case.
Related Reading: Indonesian Investigator Claims Bitcoin is Funding ISIS Operations
Even with the plea deal, the judge presiding over Central Islip federal court in New York, Judge Joanna Seybert, could sentence Shahnaz to up to 20 years in a federal prison.
Shahnaz – a U.S. citizen – was apprehended by authorities from the Joint Terrorism Task Force back in July 2017, as she was preparing to board a flight to Pakistan, on her way to Syria. The investigation also revealed that the defendant was visiting “various violent jihad-related websites and message boards, and social media and messaging pages of known IS recruiters, facilitators and financiers.”
Major Media Demonizing Bitcoin, When Banks Were to Blame
Major media outlets everywhere were quick to point out that Bitcoin was used to fund ISIS’ regime of terror, however, it was a traditional bank wire that was used as the vehicle to send the funds across the globe. Bitcoin has recently dropped to one-year lows, and is back in the headlines, but this time it’s only getting negative press, with many questioning the long-term validity of the emerging technology.
Related Reading: Blaming Bitcoin for Aiding Terrorism, Money Laundering
Pundits are quick to demonize Bitcoin for everything: from being a Ponzi scheme, to a tool for money laundering, and now, for funding terrorist operations. Here the mere mention of Bitcoin and cryptocurrency in court documents was enough for sensationalists to latch onto, completely neglecting the fact that a very basic bank wire was at the center of it all.
Crypto Not Typically an Effective Tool for Funding Terror
In this example, despite Shahnaz having access to cryptocurrencies, she ultimately chose to wire the funds to ISIS. This may be due to the fact that terrorist organizations are often located in desolate locations often hidden away from society, which makes using crypto to raise funds for their operations difficult and ineffective.
In September, during a Congressional House Financial Services Committee hearing, Fanusie revealed his findings that terrorist organizations such as ISIS have repeatedly failed to fund their criminal operation using cryptocurrencies.
Without easy access to internet or electricity infrastructure, sending and receiving cryptocurrencies creates an insurmountable challenge that has deterred terrorists from using the emerging technology to fund their criminal activities.
Even though terrorists organizations like Al Qaeda and ISIS have struggled thus far, Fanusie warned Congress that that could change in the future, and that the United States should prepare itself “for terrorists’ increasing usage of cryptocurrencies,” so the U.S. “can limit the ability to turn digital currency markets into a sanctuary for illicit finance.”
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