Taliban

Taliban had a ‘massive chilling effect’ on Afghan crypto market: Report

Crypto value received in Afghanistan surged in the wake of the Taliban seizing power in August 2021, but crypto markets have flatlined under the regime.

The Taliban’s takeover of Afghanistan has had a “massive chilling effect” on the local cryptocurrency market, bringing it to an effective “standstill,” according to a recent report.

Blockchain analytics firm Chainalysis in an Oct. 5 report stated the Middle East and North Africa (MENA) region saw the largest crypto market growth in 2022 but noted that Afghani crypto dealers had three options: “flee the country, cease operations, or risk arrest.”

The report states after the Taliban seized power in August 2021, the crypto value received in August and September that year spiked to a peak of over $150 million, then fell sharply the following month.

Before the takeover, Afghani citizens would, on average, receive $68 million per month in crypto value, mainly used for remittances. That figure has now dropped to less than $80,000 post-takeover.

*Graph from Chainalysis’ 2022 Geography of Cryptocurrency Report. Source:* *Chainalysis*

Afghanistan was 20th place in Chainalysis’ 2021 crypto adoption index released in October 2021, but now is at the bottom of the list following the Taliban takeover.

The reinstated Ministry for the Propagation of Virtue and the Prevention of Vice in charge of implementing Islamic law in the country is the reason for the change. Chainalysis explains the agency equated cryptocurrency to gambling declaring it haram — forbidden under Islamic law.

A large portion of the activity still undertaken in the country comes from money laundering from illicit sources such as bribes or drugs, an anonymous source cited to Chainalysis.

The individual added only a “small portion” is “young people who have a few hundred bucks” to day-trade digital assets.

Terror groups may turn to NFTs to raise funds and spread messages: WSJ

National security experts have raised the alarm bells over the IS-NEWS #01 NFT, which is being seen as the first case of an NFT created and shared by a “terrorist sympathizer.”

The first known case of a nonfungible token (NFT) created and shared by a “terrorist sympathizer” has come to light, raising concerns that the immutable nature of blockchain tech could help the spread of terrorist messages and propaganda.

In a Sunday article in The Wall Street Journal (WSJ), intelligence experts said the NFT could be a sign that Islamic State and other terror groups may also be using blockchain technology to evade sanctions and raise funds for their terrorist campaigns.

The NFT in question was reportedly discovered by Raphael Gluck, co-founder of the United States-based research firm Jihadoscope, who found the NFT through pro-ISIS social-media accounts.

Named IS-NEWS #01, the digital token is said to be an image bearing the Islamic State’s emblem with text praising Afghanistan-based Islamic militants for attacking a Taliban position.

Mario Cosby, a former federal intelligence analyst specializing in blockchain currencies, said the user created another two other NFTs on Aug. 26: one showing an Islamic State fighter teaching students to make explosives and the other condemning smoking cigarettes.

*A screenshot of the IS-NEWS #01 NFT (left). Source: The Wall Street Journal*

The analysts said this could be a sign that terrorist groups may be using the emerging technology to spread their message and test new funding strategies.

“It’s very much an experiment […] to find ways to make content indestructible,” said Gluck.

The digital token was reportedly listed on NFT marketplace OpenSea, but the company quickly took the listing down and closed the posters account, citing a “zero-tolerance policy on inciting hate and violence.”

The trio of NFTs was also reportedly present on NFT marketplace Rarible and several others before being taken down.

While none of the NFTs appear to have been traded, Cosby says the existence of the tokens is a cause for concern because “it’s as censorship-proof as you can get,” adding:

“There’s not really anything anyone can do to actually take this NFT down.”

Security experts have previously expressed their concerns about the future potential for terrorists to exploit emerging technologies and markets, including NFTs, to fund attacks.

In February, the U.S. Treasury Department released a study highlighting the growth of the market for NFTs as an area of potential concern.

In March, Israeli authorities seized a set of 30 crypto wallets from 12 exchange accounts linked to Hamas, a militant group based in the Gaza Strip.

Last April, Matthew Levitt, director of the Jeanette and Eli Reinhard Program on Counterterrorism and Intelligence at The Washington Institute for Near East Policy, told Cointelegraph that while crypto has been linked to several terror financing cases, “it has not yet become a primary means of terror financing.”