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The United States Office of Foreign Assets Control (OFAC) has sanctioned 24 individuals and 29 entities based in the Maldives for alleged links to ISIS-Khorasan (ISIS-K) and Al-Qaeda. Among them is Ali Shafiu, an apparent representative of ISIS-K in the Maldives, who used the Tron blockchain wallet to manage terrorist financing.
According to OFAC’s press release, Shafiu joined ISIS-K in late 2018, traveling to Afghanistan via Pakistan. He was part of the ISIS-K media office. The statement states that he previously tried to go to Syria in 2015, at the age of 28. He was also the owner of Panda Maldives Pvt Ltd – a company registered in the Maldives.
ISIS-K is the regional affiliate of the terrorist group ISIS in Afghanistan, where it routinely carries out attacks against the Taliban. It is also active in neighboring Tajikistan, Pakistan and Uzbekistan, where it has also carried out attacks and recruitment activities.
Elliptic’s Holistic Investigator solution shows that the vast majority of Shafiu’s funds originate from a large centralized exchange, in the form of the popular USD-backed stablecoin Tether (USDT). A small fraction of USDT worth $17,000 appears to be arriving in wallets previously identified by Israel’s National Counter-Terrorism Bureau (NBCTF) as belonging to illegal Palestinian money changers such as Dubai Co. For Exchange.
An Elliptic Investigator chart showing Shafiu’s wallet interacting with a major exchange and money changer Dubai Co.
The development of crypto-asset-based terrorist financing
Despite high-profile seizures and sanctions, such as OFAC’s July 31 enforcement action, terrorist financing remains an illicit aspect of the cryptoasset ecosystem. Elliptic’s internal investigators have identified a number of ways that many organizations have adopted more obscure and innovative methods to avoid detection in recent years.
Our upcoming report on the financing of terrorism through cryptoassets 2023 details some of these insights, including the increasing terrorist use of stablecoins such as USDT instead of Bitcoin, and the rise of jihadist engagement with decentralized finance (DeFi) protocols.
As part of one of the case studies in this upcoming report, the Elliptic Investigator chart below shows a pro-Taliban propaganda website that engages in crypto investments related to Solana and the BNB Smart Chain and Decentralized Exchanges (DEX). This jihadist made over $10,000 just by investing in Solana – highlighting a new frontier in how terrorists raise and engage with crypto-assets to fund their activities.
OFAC’s enforcement action underscores the importance of staying abreast of the latest terrorist financing trends. Virtual asset services will need to ensure that their terrorist financing procedures adequately encompass and mitigate the risk of interacting with terrorist funds, especially as their methods and trends become increasingly diverse and unclear.
Pre-order today to receive our upcoming report, which contains guides and key considerations for virtual asset services on how to use blockchain analytics solutions to protect against the latest terrorist financing trends.
Elliptic has taken immediate action to designate Ali Shafiu’s Tron wallet on OFAC’s list on July 31, 2023. Our research and investigations team also routinely and proactively conducts assessments of the criminal and terrorist ecosystem to ensure that identified terrorist financing activity is available for review within our blockchain analytics solution: Nexus.
Contact us for more information.
