Cryptocurrency and Terrorism: The Case of Zoobia Shahnaz

Zoobia Shahnaz, a 30-year-old woman from Long Island, has been ordered to spend the next 13 years in the custody of the United States Bureau of Prisons. According to court records and a press release issued by the Department of Justice, Shahnaz had previously been convicted of channeling funds to the Islamic States in Iraq and Syria, an international terrorist organization commonly known as ISIS. Shahnaz resorted to various fraudulent actions to acquire Bitcoin and other cryptocurrencies that she later transferred to ISIS operatives in China, Pakistan, and Turkey.

Prosecutors explained that Shahnaz, an American citizen born in Pakistan, became indoctrinated by ISIS in 2016 while volunteering as a medical technician in Jordan. Upon returning to the U.S., Shahnaz contacted ISIS operatives in the Middle East and started to become acquainted with cryptocurrency trading; she obtained loans through fraudulent means and kept an eye on the digital currency markets so that she could acquire buy Bitcoin "on the dip," meaning that she took advantage of volatility.

As Shahnaz became proficient at cryptocurrency trading, she reached out to her ISIS contacts to obtain stolen credit cards that she used to increase her token portfolio. All in all, FBI agents estimate that she was able to transfer about $150,000 to ISIS before being arrested at the John F. Kennedy International Airport.

When Shahnaz was detained by counterterrorism agents, she was about to board a flight to Istanbul. It is believed that she planned to tap into an underground transportation network to travel south across Turkey and cross into Syria; at the time of her arrest, ISIS still held positions in the Idlib province, but that changed after extensive military operations conducted by Kurdish militias, American special forces, and Syrian rebels supported by Turkish forces.

The use of cryptocurrencies by ISIS is a trend that has been developing in recent years. More established terrorist organizations such as Al-Qaeda have been using digital currency tokens to fund their operations since 2015. At the same time, some of the Syrian rebel groups that drove ISIS out of the country have been receiving donations from sympathizers who use cryptocurrencies to transfer funds.