Cryptocurrency Is a Cash Cow for Far-Right Extremists

The Right Stuff, a neo-Nazi media network that hosts the shows Fash the Nation and The Daily Shoah, which promote white supremacy and Holocaust denialism, allows its audience to donate in six different cryptocurrencies on its website. And The Daily Stormer, one of the most notorious neo-Nazi message boards and propaganda sites, received a donation of 14.88 bitcoins, worth more than $60,000 at the time, in the wake of the Charlottesville rally. (The amount of the donation is itself a reference to core white supremacist ideas: The “14” is a reference to the late white supremacist David Lane’s 14 words, “We must secure the existence of our people and a future for white children.” The “88” stands for Heil Hitler.) The Daily Stormer now only accepts Monero, a cryptocurrency that claims to be untraceable—thus making it what is termed a “privacy coin.”

In addition to his podcast, Nick Fuentes operates an “America First” store that sells merchandise, including a seasonal collection aptly named “White Boy Summer.” The merchandise can be purchased with Litecoin. For an even blunter extremist shopping experience, customers can turn to Will2Rise (W2R), the merchandising and media arm of the Rise Above Movement, a white supremacist group that boasts the skinhead movement’s emphasis on street fighting. W2R prides itself on offering an “ethical supply chain,” noting that: “All products are made in Eastern Europe, so not a single hand touches the production that is not of like mind.” W2R accepts five different cryptocurrencies as payment, including Bitcoin and Ethereum.

Domestic extremists are also finding their pleas for help—be it general support or fundraising for legal defense—answered by cryptocurrency. Jason Kessler, the organizer of the “Unite the Right” rally, solicits cryptocurrency donations for his Charlottesville legal defense fund. One campaign for Kessler’s legal defense on GiveSendGo, a Christian crowdfunding site, offers Bitcoin and Monero, a privacy coin, as ways to support the fund.

The National Socialist Movement (NSM) bills itself as “America’s Premier White Civil Rights Organization” and, unsurprisingly, advocates for national socialism in the United States. An individual affiliated with the group attempted to attack black passengers on an Amtrak train in 2017. NSM accepts Bitcoin donations on its website. Similarly, Atomwaffen Division, an accelerationist white supremacist group that aims to foment a race war that will cause the collapse of the U.S. political system, accepted Monero donations on a website affiliated with the group. (In March 2020, Atomwaffen ostensibly disbanded, though analysts believe it rebranded itself as the National Socialist Order.)

Indeed, Monero donations signal an increasing—and increasingly worrying—trend of domestic extremists trying to obfuscate their identities. As law enforcement investigations of domestic extremism grow, extremists have attempted to obstruct the tracing of cryptocurrency payments. In addition to the adoption of Monero and other privacy coins, extremists have used tactics to mask ownership of funds, such as “mixing” or “coinjoining,” protocols where users, for a small fee, can hide the ownership of their funds.

As domestic extremists get savvy, it’s time for us to get smart. To curb extremists’ activities, and mitigate the threats they pose, their funding streams should be blocked. Luckily, the U.S. government and the private sector can institute many policies which do that within three broad lines of effort: increasing designations, instituting regulations and standards, and forging public-private partnerships.

First, the U.S. government should designate violent white supremacist groups as terrorist organizations. Designations are one of the most powerful tools that the U.S. government can deploy to disrupt extremists’ fundraising capabilities, but the United States has only designated one white supremacist group to date. While U.S. law prohibits designations of domestic groups, the government can and should increase designations of violent white supremacist groups that have a foreign nexus. The power of designations would also encourage cryptocurrency companies to disengage from designated entities.

Second, policymakers should consider a host of regulations to bring cryptocurrencies, including privacy coins and central bank digital currencies (CBDC), under the regulatory perimeter. Regulations would provide the cryptocurrency industry with a clear, uniform set of rules for how to treat illicit activity. Regulations for privacy coins could take the form of strengthening reporting standards for cryptocurrency exchanges that transact with privacy coins. Establishing standards now for CBDCs, such as the digital dollar—even if adoption of these currencies remains years away—would help mitigate extremists’ abuse of government-backed digital currencies. Supporting global standards on virtual assets would also help prevent extremists’ ability to exploit cryptocurrency by closing the gaps between regulatory regimes in different countries, and would provide the cryptocurrency industry with uniform standards for assessing illicit or suspicious transactions.

Lastly, blockchain analysis firms and non-partisan watchdog groups should form public-private partnerships. Such collaboration would leverage both actors’ tools to produce actionable intelligence. Ultimately, such partnerships would increase awareness of how extremists use cryptocurrencies and would allow relevant companies in the cryptocurrency space to better understand this usage.

As the Freedom Convoy protests enter their fourth week, the Canadian government is targeting protestors’ ability to fundraise, including via cryptocurrency. It’s time for Washington to do the same for domestic extremists. Absent action, cryptocurrency will remain their cash cow.