paris-attack

No, Bitcoin is not tied to the Paris attacks.

Correcting the record about a purported link mentioned in congressional testimony yesterday.

Yesterday I had the honor of testifying before a hearing of the Terrorism and Illicit Finance Subcommittee of the House Financial Services Committee on the the national security implications of financial innovations like virtual currencies. The hearing went very well. It was a lively discussion that I hope the committee members and staff found educational. There was one statement made on the record, however, that after a bit of review I feel is important to correct.

My fellow witness, Scott Dueweke of IDPay and Zebryx, began his testimony by telling the committee that “understanding the promise and peril of virtual currencies requires looking well beyond the bright shiny Bitcoin.” He argued, and during the testimony I agreed, that virtual currencies beyond Bitcoin, in particular centralized virtual currencies like WebMoney, posed as much if not a greater risk.

Despite his exhortation to think beyond Bitcoin, Mr. Dueweke at one point made this statement:

I also want to make the point that the position that Bitcoin is not being used for any terrorist activities might be a bit stretched as well. It’s not reported in the United States, but it’s well-reported in Europe, including Agence France-Presse, that four of the automatic weapons that were used in the Paris attacks were purchased with bitcoin from an online dark market seller in Germany and that was reported in court, in open court documents in Stuttgart.

First, it should be noted that no witness on the panel took the position that Bitcoin is not being used by terrorist groups. In fact, every witness testified to the contrary. More to the point, when I heard the statement about the Paris attack, it did not ring true to me given all that I’d read on the subject, but I did not have the facts at hand to rebut it. After a little research since then, however, I believe that was not an accurate statement.

The AFP article Mr. Dueweke referenced is a summary of a report that was published in Bild, which is a German tabloid that Wikipedia, quoting the Christian Science Monitor, describes as “notorious for its mix of gossip, inflammatory language, and sensationalism[.]” Also according to Wikipedia, Der Spiegel wrote in 2006 that Bild “flies just under the nonsense threshold of American and British tabloids … For the German desperate, it is a daily dose of high-resolution soft porn[.]” The AFP article contained no original reporting or new facts beyond summarizing the Bild article.

The Bild article, in turn, has been largely debunked, as Deutsche Welle documents comprehensively in a report. After the sensational Bild article was published, DW writes, “several reporters had called the prosecutors in Stuttgart and found out that, though they had indeed arrested Sascha W. for selling both converted replica guns and real Kalashnikovs, there was no evidence of a connection to the Paris attacks.” It goes on to say that, “According to an online report by state broadcaster ARD, the speculation may have been prompted by a misreading of an analysis by the German customs investigation bureau, which said that the guns Sascha W. had sold were of the same kind as those used in the Paris attacks.” (I encourage you to read the whole DW article.)

So, not only weren't the guns used in the Paris attack conclusively purchased from a dark market seller in Germany, Mr. Dueweke's statement that they were “purchased with bitcoin” is unsubstantiated. Neither the AFP nor the Bild articles mention Bitcoin at all. Indeed, likelier payment methods for the Paris attack guns are cash or the very alternative payment systems that Mr. Dueweke sought to highlight by encouraging us to “look beyond the shiny Bitcoin.”

Mr. Dueweke’s statement was based on assertions which have not been proven, and he relied on a trusted source (AFP) which was referencing a less trusted source (Bild), neither of which have ever issued retractions. This is a very understandable mistake to make. I've been in touch with Mr. Dueweke and he agrees with this and gave me this statement: “For the sake of clarity I would like to amend the record to include that there is doubt as to whether the dark web seller of weapons mentioned in the article did in fact make a sale to the Paris attackers. While bitcoin is by far the most common virtual currency used on the dark web, and is likely to be the virtual currency used on DW Guns, there is no proof that such a transaction occurred and the use of Bitcoin was inferred by me and not actually reported on by Agence France-Presse. It does remain a possibility that this transaction did occur, but the assertion made by the German tabloid Bild remains unsubstantiated. It was this story in Bild that Agence France-Presse was referencing.”

By correcting the record here I do not mean to diminish the gravity of terrorist use of cryptocurrencies. As I’ve stated before, it is a serious threat and we are working to make sure policymakers and law enforcement have the tools they need to combat it. That said, when we talk about such sensitive matters, we must be very careful with our words. Otherwise, we risk being part of a link that creates myths that persist and that can have unintended consequences.

What began as a misreported story in a German tabloid, was summarized in a respected French wire service, and then stated as a fact during a congressional hearing on the record—with the addition of Bitcoin to the story. Unless we correct the record, the next link in the chain could be a member of Congress citing as fact testimony from the Congressional record. If you’re looking for a good and careful assessment of terrorist use of cryptocurrency, I’d recommend this recent report from the Center for a New American Security.

Based in Washington, D.C., Coin Center is the leading non-profit research and advocacy center focused on the public policy issues facing cryptocurrency and decentralized computing technologies like Bitcoin and Ethereum. Our mission is to build a better understanding of these technologies and to promote a regulatory climate that preserves the freedom to innovate using permisionless blockchain technologies.