Former Federal Reserve Chair Janet Yellen highlighted the “growing concern” of crypto being leveraged to finance terror just weeks after the US Capitol came under attack from domestic terrorists.
President-elect Joe Biden has named former Fed Chair Janet Yellen to lead the United States Treasury Department when his administration formally takes office, which is expected to occur later today.
Yellen said that the United States needs to examine how it can curtail the use of crypto for illicit financing.
The former Fed Chair’s remarks come just two weeks after a mob of domestic terrorists stormed the US Capitol Hill building allegedly in an attempt to overturn the defeat of President Donald Trump in the recently concluded presidential elections.
While the mob allegedly stormed the Capitol building in an attempt to disrupt the Electoral college vote count by a joint session of Congress and prevent the formalization of president-elect Joe Biden’s election victory—new evidence has come to light indicating these violent protestors had been paid in Bitcoin.
Janet Yellen Concern Over Crypto Illicit Financing
The incoming Secretary of the Treasury, Yellen made the comments during her Senate confirmation hearing in response to a question from Sen. Maggie Hassan (D-NH) who asked about the potential for cryptocurrency to be leveraged in financing criminal and terrorist activities.
“The technologies to accomplish this change over time and we need to make sure that our methods for dealing with these matters, with tech terrorist financing, change along with changing technology, cryptocurrencies are a particular concern.”
The former Fed Chair added:
“I think many [cryptocurrencies] are used, at least in a transaction sense, mainly for illicit financing and I think we really need to examine ways in which we can curtail their use and make sure that anti-money laundering doesn’t occur through those channels.”
Attacks on the Capitol Paid in BTC
Investigations of the US Capitol Hill riot indicate that payments to the domestic terrorists were made in Bitcoin from a French donor who went by the pseudonym “pankkake”.
The BTC transferred to the violent protestors was worth over $500,000 (around 28.15 Bitcoins) and distributed to 22 different digital wallets. Most of the recipient addresses belonged to internet personalities and far-right activists, and the payments were made right before the storming of Capitol Hill.
A report reveals that the French donor left a suicide note a day after he transferred the donations to the right-wing activists and organizations. However, it is yet to be established if the French computer programmer is dead or still alive. The report shows that the mystery donor left the suicide note on a personal blog a day after he transferred the Bitcoin donations.
In the suicide note, “pankkake”, revealed that his health difficulties caused him to take such extreme actions. He further stated that he had “bequeathed [his] fortune to certain causes and certain people.” In other sections of his blog, the donor talked about the collapse of the “Western civilization,” that made him hate his heritage and ancestors. The anonymous donor wrote:
“I care about what happens after my death. That’s why I decided to leave my modest wealth to certain causes and people.”
Chainalysis blockchain and cryptocurrency analysis firm conducted investigations into the Bitcoin transfer and identified that Trump supporter and internet personality Nick Fuentes was the largest beneficiary of the donations. He obtained 13.5 Bitcoin worth around $250,000.
Chainalysis said that it cannot be determined for sure whether the funds from the French donor assisted in financing the US Capitol Hill riot. However, Acting US attorney, Michael Sherwin, stated that the investigation into the matter has so far rendered it as unprecedented, with prosecutors treating the case as a counterintelligence or counterterrorism investigation.
Crypto Used Far Less than Fiat to Launder Money
Last week, ECB President Christine Lagarde said that Bitcoin is a “funny business” asset that is used for money laundering and needs global regulation.
Christine Lagarde was unequivocal in her criticism. She stated:
“For those who had assumed it might turn into a currency — terribly sorry, but this is a highly speculative asset which has conducted some funny business and some interesting and totally reprehensible money-laundering activity.”
Despite the claims of Janet Yellen and ECB President Lagarde, a SWIFT report published last year in September entitled “Follow the Money” revealed that money laundering via cryptocurrencies is not a preferred tool for criminals.
The report highlighted that traditional methods like cash mules, cash businesses, and drug trade remain at the forefront of laundering activites, and criminals are still using cash over crypto in these activities at a ratio of 800:1.
The SWIFT report, however, did find that the use of cryptocurrency for laundering stolen bank funds will rise in the future and privacy coins and online marketplaces are an upcoming threat.
Per the report:
“Favorable factors include the growing number of altcoins (alternative cryptocurrencies) that have recently launched and which focus on providing full transaction anonymity,” it noted. However, private cryptocurrencies and online marketplaces are an upcoming threat.”
President-elect Joe Biden will officially take office tomorrow and Janet Yellen is anticipated to be the new United States Secretary of the Treasury.
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