Domestic extremists who receive and send money via cryptocurrencies use major online exchanges, and these platforms place almost no restrictions on the activities of hate groups or their sympathizers.
That's the main finding of a new report from the Anti-Defamation League's Center on Extremism, provided exclusively to USA TODAY.
The advocacy organization found that users sent money to white supremacist and neo-Nazi groups including the Goyim Defense League, NSC-131 and the National Socialist Movement, and to online extremist propaganda outlets such as Counter-Currents and Radio Albion, all of which use major cryptocurrency exchanges.
The report focuses on only a small number of extremists and extremist groups, which the Anti-Defamation League said it can track because they have made their cryptocurrency information public. But it raises larger questions about how successfully extremists can use cryptocurrencies without significant opposition.
These groups have been subject to “deplatforming” or restrictions in other areas of online technology where they once flourished, such as social media platforms and payment apps. Cryptocurrency exchanges — which transfer funds that can then flow untracked into private bank accounts — deserve similar scrutiny, the ADL says.
The report said the ADL tracked 15 extremist individuals and organizations that last year moved cryptocurrencies into or out of 22 service providers, including major companies like Binance and Coinbase. This represents a small sample of the hundreds of extremists and groups monitored by the Anti-Defamation League.
The ADL report says that as of December 1, 2023, only one of these providers has an explicit policy prohibiting the financing of hate or extremist activities. Although many other providers ban hateful or extremist posts on their sites, they do not specifically prevent extremists from using their platforms to raise money for their activities, the ADL report concludes.
Cryptocurrency experts say they are seeing an increase in transactions from known stragglers.
“It appears that extremists, terrorists and criminals of all stripes are increasingly turning to cryptocurrency exchanges to raise, transfer and distribute funds,” said Eswar Prasad, a professor at Cornell University and author of “The Future of Money.”
It's impossible to know what these extremists ultimately spent that money on, just as it's difficult to know how many fringe groups are reaping a windfall from cryptocurrencies.
With anti-Semitic incidents, hate crimes, and other acts of hate on the rise in the United States, ADL CEO Jonathan Greenblatt says a hands-off approach to cryptocurrencies poses a major risk. He called on stock exchanges to develop policies that address the financing of hate and extremism, and called on regulators to provide guidance to this industry.
“It is more important than ever to identify and disrupt the funding that underlies hateful actors and their intolerance,” Greenblatt told USA TODAY in a statement. “The rise of hatred requires not only awareness, but relentless action to dismantle the financial infrastructure that fuels extremist agendas.”
Representatives of the League for the Defense of the Goyim and the National Socialist Movement did not respond to requests for comment for this story.
Cryptocurrencies have emerged as a safe haven for white supremacists and other extremists following a crackdown by online payment processors such as Stripe and PayPal following the deadly white supremacist demonstration in Charlottesville, Virginia, in August 2017.
Far-right agitators have opposed so-called “bank tapering” – turning off the financial spigot due to extremist rhetoric or activity – and say it violates their rights to freedom of expression.
Christopher Ballhaus, who runs a neo-Nazi group in the Northeastern United States and marched with NSC-131, told USA TODAY that the Anti-Defamation League “will try to ban us from the racquetball tournament.”
more:Anti-Semitism, and Questions for the Anti-Defamation League
How extremists use cryptocurrencies, and how to track them
The report is “a preliminary assessment of a complex and sprawling ecosystem,” ADL said.
Through a cryptocurrency exchange, digital currency can be converted into traditional currency such as US dollars and transferred to a debit card, credit card, or bank account.
In contrast to a bank account, where any individual extremist can deposit or withdraw money with relative privacy, the groups tracked by the Anti-Defamation League use their accounts on cryptocurrency exchanges to transfer — and, in some cases, to request — money.
When these groups ask for contributions, they publicly disclose the identity of their cryptocurrency “wallet,” making it possible to track the funds they receive and move, the Anti-Defamation League said. This allows for greater scrutiny of what these exchanges are doing – or not doing – towards extremists on their platforms.
Indeed, some extremists are taking steps to warn their donors about how to avoid such scrutiny. The ADL report notes that the white supremacist propaganda network, Radio Albion, advises its followers to donate using Monero, a nearly untraceable cryptocurrency, or use an intermediary wallet to transfer funds.
The actual dollar amounts tracked in the report are a small portion of the total cryptocurrency market, which may amount to tens of billions of dollars worldwide. It's also just a snapshot of the total local extreme cryptocurrency funding. One expert told USA TODAY that some extremists are “sitting on millions.”
“Some of these people have real wealth,” said John Bembenek, a cybersecurity expert who designed an automated, real-time tracker of neo-Nazi fundraising and expenses.
The report says that of the nearly $150,000 ADL tracked, the largest amount was found in Kraken, which was used to move nearly $80,000. White nationalist publisher Counter-Currents conducted more than $61,800 worth of cryptocurrency transactions, the most of any extremist group or individual in the sample.
The Anti-Defamation League found that supporters of the white supremacist advocacy group Goyim, which organizes anti-Semitic protests and spreads anti-Semitic propaganda, sent the group more than $3,000 in cryptocurrency last year.
What are the rules on cryptocurrency exchanges regarding extremism?
Representatives of Kraken and Coinbase said the companies have protections against customers using their exchanges to launder money, fund terrorism, or other illegal activity. But neither company has a policy that specifically addresses hate speech or other extremist activities by its customers.
A Kraken spokesperson told USA TODAY that there is a section of the company's terms of service that does not specifically mention hate speech but that the company reserves the ability to close an account “for activities on any platform.”
Kraken uses screening tools that check new customers and existing users daily to identify ties to terrorist or extremist organizations, a company spokesperson told USA TODAY: “We have an established framework and process by which alerted accounts are reviewed and actions are taken to ensure we act responsibly.”
Both companies said they were investigating the allegations in the ADL report.
Although cryptocurrencies leave a chain of transactions, funds can be transferred with a certain degree of anonymity. Tracking and verifying the identities of cryptocurrency account holders can be difficult, Prasad said. As well as measuring the number and value of transactions that support illegal activities or that support extremist groups.
He said that in principle, exchanges should meet the regulatory requirement of knowing exactly who their customers are, but many argue they have a limited obligation to do so, and others operate outside the jurisdiction of US regulators.
“This clearly opens the door to their use in illicit financial transactions by users who cannot or do not want to use traditional financial channels,” Prasad said. “Ultimately, it is strict regulation and tighter oversight by regulators that will help fine-tune the cryptocurrency ecosystem, including major exchanges.”
How cryptocurrency became a favorite of extremists
Hate-filled sites like the neo-Nazi blog Daily Stormer were early adopters of cryptocurrencies, and domestic extremists have been seeking cryptocurrency contributions for years.
In a link to donations on Stormfront's homepage, it says Bitcoin is its “preferred payment method.”
The ADL report notes that part of the appeal of cryptocurrencies to neo-Nazis and white supremacists is the idea that cryptocurrencies are free from the purported constraints of the banking system — an industry that anti-Semitic tropes falsely claim is “controlled by Jews.”
More recently, domestic extremists have also flocked to video streaming sites with cryptocurrency-based revenue systems such as Odysee and DLive to raise hundreds of thousands of dollars in donations and operate mostly outside government oversight.
Cryptocurrencies fight deplatforming, citing freedom of expression
The Kraken exchange declares its mission to encourage global adoption of cryptocurrencies “so everyone can achieve financial freedom and inclusion.”
Although cryptocurrency exchanges may not welcome extremists, this stance equates to a laissez-faire approach, Bembenek says.
“Cryptocurrency exchanges tend to have a fairly strong and somewhat libertarian mentality, which is, ‘It’s not my problem.’ I’m not responsible for the rhetoric,” Bembenek said.
Without evidence of criminal wrongdoing, exchanges avoid taking action, he said.
“If you can point to human trafficking? Well, they'll do something about it. If you can point to actual acts of violence of significance, if they're smuggling weapons using cryptocurrency exchanges or drugs, they can do something,” Bembenek said. You get a few hits here and there, but people can create other wallets. They can move their cryptocurrencies. There is always another exchange.”
Will regulators and Congress crack down on cryptocurrencies?
The ADL report comes amid a push to tighten rules governing the cryptocurrency industry.
Since FTX's collapse, federal authorities have filed criminal charges against a number of cryptocurrency executives, and the Securities and Exchange Commission has filed lawsuits against some of the industry's biggest players.
Changpeng Zhao, founder of Binance, recently pleaded guilty to money laundering violations. Binance, the world's largest cryptocurrency exchange, has agreed to pay $4.3 billion in fines and compensation. Court documents showed that Chow and other employees tried to evade laws including the Bank Secrecy Act, which requires financial institutions to know the true identities of their customers.
Binance did not respond to a request for comment.
Sen. Elizabeth Warren, Democrat of Massachusetts, is rallying bipartisan support for a tougher stance on money laundering, drug trafficking and sanctions evasion. The Treasury called on the industry to work with the government to prevent illicit activity by “transnational criminal organisations, terrorists and rogue states”.
Crypto is responding to intense scrutiny with an attack in the run-up to the 2024 election. Three super PACs backed by industry executives and investors said last month they had raised $78 million to support cryptocurrency-friendly candidates running for seats in the House and Senate.
