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Which crypto blockchain is preferred by terrorist organisations?

Militants stand guard around the stage as Yahya Sinwar, Palestinian leader of Hamas in the Gaza Strip, attends a rally of supporters, May 24, 2021, in Gaza City.
Militants stand guard around the stage as Yahya Sinwar, Palestinian leader of Hamas in the Gaza Strip, attends a rally of supporters, May 24, 2021, in Gaza City. Copyright John Minchillo/AP
Copyright John Minchillo/AP
By Doloresz Katanich with Reuters
Published on Updated
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A fast-growing crypto network called Tron has become the major platform for crypto transfers backing groups such as Hamas and Hezbollah.

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Quicker and cheaper than its larger rival Bitcoin, Tron has overtaken its rival as a platform for crypto transfers associated with groups designated as terror organisations by the EU, Israel, the US and other countries, according to a Reuters analysis.

The media outlet found out that crypto seizures announced by Israeli security services since 2021 reflect a sharp rise in the targeting of Tron wallets and a fall in Bitcoin wallet seizures.

"Earlier it was Bitcoin and now our data shows that these terrorist organizations tend to increasingly favor Tron," Mriganka Pattnaik, CEO of New York-based blockchain analysis firm Merkle Science, told Reuters, citing Tron's faster transaction times, low fees, and stability.

Israel's National Bureau for Counter Terror Financing (NBCTF), which is responsible for such seizures, froze 143 Tron wallets between July 2021 and October 2023 that it believed were connected to a "designated terrorist organization" or used for a "severe terror crime," the Reuters analysis found.

Seizures of terrorist groups' crypto accounts

Following the attacks by Hamas on 7 October, killing around 1,200 people, Israel's subsequent bombardment and ground invasion of Gaza has killed some 14,000 people. In its response, Israel has also stepped up scrutiny of Hamas' financing.

Almost two-thirds of Israel's Tron seizures – 87 - were this year, including 39 wallets owned by Lebanon's Hezbollah, and 26 belonged to Hamas ally Palestinian Islamic Jihad, according to Israel. 

The seizures have also included 56 Tron wallets linked to Hamas, the majority of which was connected to a single Gaza-based money exchange company called Dubai Co. For Exchange.

Weeks after the Hamas assault, Israel announced its biggest known seizure of crypto accounts yet, freezing around 600 accounts it connected to Dubai Co., which it calls a terrorist group "due to the aid that they provide to the Hamas terrorist organization, particularly its military arm, in transferring funds on a scale of tens of millions of dollars a year".

A representative for Dubai Co., whose email was listed on the seizure order, did not respond to a request for comment.

More than a dozen people whose funds were frozen among the 600 accounts told Reuters they had been using Tron, but denied any connection to Hamas or Islamic Jihad, saying they traded crypto to help their business or personal finances.

Only one of the people, who identified themselves as Neo, said it was possible they had transferred money on one occasion to somebody associated with Hamas.

Estimates of the sums of money that reach proscribed groups through crypto are unreliable because it is hard to say whether money sent to seized wallets was really destined for those groups.

Hayward Wong, a spokesperson for British Virgin Islands-registered Tron said that all technologies could "in theory be used for questionable activities". He said that Tron did not have control over those using its technology and that it was not linked to the groups identified by Israel.

The value of crypto transactions and the digital wallet addresses used for them can be traced on the blockchain - a public ledger that underpins crypto. However, it is hard for those outside law enforcement or crypto trading platforms to know the real identity of those involved in the transactions.

What's the dominant cryptocurrency across the Tron network?

The people Reuters consulted additionally said their research showed the cryptocurrency Tether was dominant across the Tron network.

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Tether is the third-largest crypto token, with a market value of $89 billion (€81.29 billion), up by around a third in the past year, according to CoinGecko data.

Tether, the world's biggest so-called stablecoin, is backed by reserves and aims to keep a 1:1 peg with the dollar. The company said in a statement that it regularly traced and froze tokens "used for nefarious purposes," and coordinated these efforts with law enforcement.

Despite its lack of name recognition outside crypto circles, Tron is the dominant blockchain for Tether transactions, currently hosting $48 billion of the tokens, according to Tether's website. Average daily transactions on Tron hit 9.1 million from April-June, according to data firm Messari, up over 70% from the same period last year.

Justin Sun, who founded Tron in 2017, was sued by the US Securities and Exchange Commission (SEC) in March for allegedly artificially inflating trading volumes and selling Tron tokens as an unregistered security. Sun said the SEC charges "lack merit".

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