Bitcoin’s 80 percent climb in December made headlines last week and for the lucky investors who can now reap the benefits of its heightened value, the cryptocurreny may seem like a hallmark of the future. But as warnings grow over the risk of a speculative bubble and volatile price fluctuations, another concern has emerged— bitcoin’s anonymity and its potential use in money laundering schemes.
Last Wedneday, Zoobia Shahnaz, a US citizen, was arrested on suspicion of having funneled at least US$62,000 in bitcoin to the terrorist group ISIS.
According to The US Department of Justice , the FBI New York Joint Terrorism Task Force successfully intercepted Shahnaz after she fraudulently applied for over a dozen credit cards and obtained a loan for approximately $22,500 under false pretenses. After converting illegally obtained money into bitcoin and other cryptocurrencies, Shahnaz is alleged to have wire-transferred over $150,000 to individuals and apparent shell entities in Pakistan, China and Turkey.
According to ABC news, agents said she gave false and conflicting explanations about her overseas wire transfers.
After laundering money and sending it to ISIS using bitcoin, Shahnaz allegedly attempted to leave the US and travel to Syria via a multi-day layover in Istanbul.
But Steve Zissou, an attorney assigned by the judge to represent Shahnaz, told Newsday that she never tried to help ISIS. He said she wanted to help Syrian refugees she met while volunteering.
"Whatever she did was for humanitarian purposes only," Zissou said.
If sentenced, Shahnaz faces more than 90 years in prison. The charges contained in the indictment are merely allegations, and her court date is set for January 5, 2018.
In its request for a detention order, the U.S. Attorney's Office highlighted the ease with which cryptocurrencies can be used for maleficent purposes, NPR reports.
"Cryptocurrencies operate independently of formal banking structures and provide layers of anonymity to their users," the U.S. Attorney's Office wrote. "Persons engaged in illicit activity such as money laundering and terrorist financing may use cryptocurrencies to avoid detection by law enforcement or intelligence services."