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Alarming! How Cryptocurrency (Bitcoin) Is Being Used For Extortion And Ransom

As Bitcoin and other cryptocurrencies continue to grow, the question of regulation becomes increasingly pressing. It is essential that steps are taken to understand potential areas of weakness in this technology before it, and others like it, become mainstream methods of transferring illicit funds around the world.

Bitcoin currency is being used to transfer money from one place to another without any identification and does not require any third-party verification. Unlike conventional currencies, cryptocurrencies are decentralized, and therefore not subject to the same regulations, reviews, and monitoring as in financial institutions or banks.

This means that potential criminal transactions that are processed in cryptocurrency bypass the regulatory controls that banks are legally required to perform. Recently, an engineering student in Karachi has been arrested for sending bitcoin donations to militants in Syria. According to the police, the use of bitcoin in kidnapping for ransom and extortion has also increased in the country.

Pakistani police officials say the use of other digital currencies, including bitcoins, in crimes such as international terrorist financing, extortion, and the ransom is on the rise.

According to an Arab News report, the bitcoin currency, which is now common, is being used to transfer money from one place to another without any identification and does not require any third-party verification.

Militant groups around the world, including ISIS, and their supporters have stepped up fundraising activities through digital currency.

Pakistan has recently taken steps to meet the targets set by the Financial Action Task Force (FATF) as it was put on the ‘gray list’ in 2018 for failing to curb terror funding. The FATF gave Pakistan a deadline until February 2021 to implement the internationally agreed action plan. The next meeting of the task force will be held between February 22 and 25.

“Ever since we have taken steps against illegal funding, we have seen the trend of bitcoin being used in crimes around the world,” Raja Umar Khattab, head of the Sindh police’s counter-terrorism department, told Arab News.

Last month, they arrested Hafiz Muhammad Omar bin Khalid, an engineering student accused of sending money to militants in Syria via bitcoin. Omar Shahid Hamid, deputy head of the anti-terrorism department, told reporters last month that Omar bin Khalid had sent Rs 1 million before his arrest.

Another student has also been arrested in 2018 for sending financial support to al-Qaeda militants in Afghanistan. In December 2019, Omar bin Khalid received a message from a telegram account about the procedure for sending aid to the off-shoots of ISIS fighters in Syria.

A user in the Telegram group wrote, “Help the jihadists and their families by sending money via bitcoin.” Fellow Zia took Sheikh to Turk. The Turks converted the money into bitcoins and sent them to “proclaimed jihadis” in Syria.

Last year, Zobia Shahnaz, a Pakistani-American, was also sentenced to 13 years in prison for sending more than 1.5 million dollars to ISIS. Shahnaz, 27, confessed to sending the money to people in Pakistan, Turkey, and China for ISIS.

An FIA official told Arab News that it had received dozens of complaints in recent months asking victims to transfer ransom money to bitcoins. According to the official, the cryptocurrency is being used in international and local cases including extortion, kidnapping for ransom, harassment, and money laundering as it has no central system.

In December, an unidentified man also demanded Rs 3 million in blackmail from a Karachi student for posting and removing her private photos on a pornographic website. The FIA ​​tracked down the man, who was based in an African country and hacked the victim’s phone through Snapchat.

Pakistan’s central bank issued a circular in April 2018 banning financial institutions, banks, and payment institutions from transferring, storing, trading, or using money in virtual currency or tokens.

TV host Waqar Zaka, who is campaigning for the permission of cryptocurrency in Pakistan, had filed a case against the FIA ​​last January for arresting people for doing business in bitcoin. He called trading in virtual currency a basic human right.

Waqar Zaka had told Arab News that “any ban on the digital transaction will stop Pakistanis from making huge profits.” The developed countries of the world, which are in the FATF, are allowed to use cryptocurrency because they know that it cannot function without the Internet and it has a digital address.

As Bitcoin and other cryptocurrencies continue to grow, the question of regulation becomes increasingly pressing. It is essential that steps are taken to understand potential areas of weakness in this technology before it, and others like it, become mainstream methods of transferring illicit funds around the world.

About Zara Ali

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