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Large bitcoin payments to right-wing activists a month before Capitol riot linked to foreign account

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from Yahoo News – Latest News & Headlines.

WASHINGTON — On Dec. 8, someone made a simultaneous transfer of 28.15 bitcoins — worth more than $500,000 at the time — to 22 different virtual wallets, most of them belonging to prominent right-wing organizations and personalities.

Now cryptocurrency researchers believe they have identified who made the transfer, and suspect it was intended to bolster those far-right causes. U.S. law enforcement is investigating whether the donations were linked to the Jan. 6 assault on the U.S. Capitol.

While the motivation is difficult to prove, the transfer came just a month before the violent riot in the Capitol, which took place after President Trump invited supporters to “walk down Pennsylvania Avenue” and “take back our country.”

Right-wing figures and websites, including VDARE, the Daily Stormer and Nick Fuentes, received generous donations from a bitcoin account linked to a French cryptocurrency exchange, according to research done by software company Chainalysis, which maintains a repository of information about public cryptocurrency exchanges and whose tools aid in government, law enforcement and private sector investigations. Chainalysis investigated the donations after Yahoo News shared the data points about the transaction.

According to one source familiar with the matter, the suspicious Dec. 8 transaction, along with a number of other pieces of intelligence, has prompted law enforcement and intelligence agencies in recent days to actively investigate the sources of funding for the individuals who participated in the Capitol insurrection, as well as their networks. The government is hoping to prevent future attacks but also to uncover potential foreign involvement in or support of right-wing activities, the source said.

During a press conference on Tuesday on the investigation into the Capitol riot, acting U.S. Attorney Michael Sherwin said the “scope and scale of this investigation in these cases are really unprecedented.” At this time, Sherwin added, prosecutors are treating the matter as a “significant counterterrorism or counterintelligence investigation” involving deeper dives into “money, travel records, disposition, movement, communication records.”

One of the ways extremist groups have made money in recent years is online through cryptocurrency and crowdfunding. Bitcoin, which was anonymously released online in 2009 as open-source software, exists only virtually. It does not utilize a central bank or administrator to disburse funds, nor does any government control or distribute it. While bitcoin has fluctuated in value in recent years, and continues to do so, it gained mainstream popularity around 2017, the same year prominent alt-right figure Richard Spencer tweeted, “Bitcoin is the currency of the alt right.”

A 2017 Washington Post investigation explored how far-right groups turned even more aggressively toward bitcoin following the deadly August 2017 “Unite the Right” rally in Charlottesville, Va. The story cited research by the nonprofit Southern Poverty Law Center that identified a large bitcoin donation to Andrew Anglin, the editor of the Daily Stormer, a prominent neo-Nazi website that accepts bitcoin donations. At the time, the donation was worth around $60,000.

A “newfound expertise in online messaging and recruitment, coupled with the fact that modern extremist groups are generally young and digitally savvy, means that these organizations and individuals have fundamentally altered the way that extremists raise money,” wrote Alex Newhouse, a data analyst at the Middlebury Institute of International Studies at Monterey, in a 2019 report that explored the links between white supremacists and digital currency.

Some prominent right-wing groups or sites display their bitcoin wallets prominently, the report noted. “The lack of regulation over Bitcoin has driven its adoption by white supremacists,” it said.

While cryptocurrency has been used by extremist groups and criminals to raise funds while shielding their identities, bitcoin is pseudonymous rather than anonymous. Bitcoin wallet addresses are permanent, and the digital ledger of transactions, called the blockchain, is public and can’t be changed. That means if people identify their bitcoin wallet addresses, as many right-wing groups do to raise funds, transactions can be traced, which is what allowed Chainalysis to uncover information about the source of the large December donations.

The source of the funding, according to research conducted by Chainanalysis, appears to be a computer programmer based in France who created an account in 2013 — and who maintained a personal blog, which was not updated between 2014 and Dec. 9, 2020, the day after the “donations.”

Chainalysis researchers discovered a blog post from the bitcoin user that reads like an apparent suicide note, bequeathing his money to “certain causes and people” in light of what he describes as “the decline of Western civilization,” though the researchers were unable to confirm that the user was in fact dead. Chainalysis declined to publish the user’s name, citing privacy concerns due to the inability to conclusively confirm his death and out of concerns over ongoing law enforcement investigations.

An email to the apparent French donor did not immediately receive a reply.

Chainalysis investigators relied on openly available information, or public bitcoin transactions, to investigate and map out the large transaction. The original donor was registered on NameID, an internet service that allows bitcoin users to tie their online pseudonym or email address with their bitcoin profile — information the original donor included. Investigators tracked that email address to the blog, and to several cryptocurrency forum posts going back to 2013.

According to their research, Fuentes, a popular right-wing commentator who was suspended from YouTube last winter for violating its policies on hate speech, received the largest chunk of funding on Dec. 8 — about $250,000 in bitcoin. The Daily Stormer and the anti-immigration website VDARE were among the other recipients.

Yahoo News reached out to the recipients named in this article to confirm whether they had received the funding, what information they had about the donor and what they planned on doing with the funds. None returned a request for comment, although Fuentes tweeted an obscene gesture, naming several journalists, including this reporter, shortly after the inquiry was sent.

While the Daily Stormer website openly requests cryptocurrency donations, it also includes a disclaimer that says it is “opposed to violence” and that “anyone suggesting or promoting violence in the comments section will be immediately banned.”

While there’s no evidence that Fuentes directly participated in the Capitol riot, something he has so far denied, the financial resources of prominent right-wing actors are of growing interest to law enforcement.

“I’d be stunned if both nation-state adversaries and terrorist organizations weren’t figuring out how to funnel money to these guys,” one former FBI official who reviewed the data for Yahoo News said. “Many of them use fundraising sites (often in Bitcoin) that are virtually unmonitored and unmonitorable. If they weren’t doing it, they’d be incompetent.”

Additionally, much like conversations that took place on social media in the weeks leading up to the Capitol riot, the digital currency transactions are happening in plain sight. While cryptocurrency has the reputation of being anonymous and shadowy, that’s actually a common misconception, explained Maddie Kennedy, Chainalysis’s communications director. “With the right tools you can follow the money,” she said. “Cryptocurrency was designed to be transparent.”

While there are methods that cryptocurrency users can deploy to obfuscate their identities — including using “privacy coins” such as Monero, which are difficult to trace, or using a “mixer” that allows various users to combine their bitcoins and mix them together to disguise their origin — there’s no indication the French programmer utilized those tools, Kennedy said.

Though the donations are not a smoking gun or indicative of a crime, and it remains unclear to what extent the Capitol riot was coordinated in advance, the activity is nonetheless revealing, according to Kennedy.

“These extremist groups are probably more well organized and well funded than what was previously believed,” she said. Chainalysis maintains a database of “domestic extremists” who have cryptocurrency accounts, and while the company has traced donations to right-wing groups over the years, the December deposit was “the single biggest month we’ve ever observed” directed toward these causes, the researchers wrote.

“This is evidence to show they’re raising money,” Kennedy said. Additionally, the fact that the donor was outside the United States suggests “this has international scope,” she continued, a fact that “law enforcement should be paying attention to.”


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