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Bitcoin’s boom is a boon for extremist groups

After Charlottesville’s bloody Unite the Right rally in August, technology companies toughened rules against hate speech and banned many radicals from utilizing Web hosting services, social media platforms and online payment systems.

But some on the farthest edges of the political spectrum soon found an efficient tool for thwarting this industry crackdown: bitcoin.

Even before Charlottesville, Richard Spencer, a outstanding member of the alt-right, a movement that defends racist, anti-Semitic and sexist views and searches a whites-only state, had gone as far as confirming bitcoin “the currency of the alt right.” But far-right political leaders and experts on radicals movements alike say the acceptance of bitcoin gained new urgency after Charlottesville as extremists looked for ways to operate beyond the reach of government control and the changing policies of U.S. tech companies.

Those who started acquiring bitcoin in August already have derived substantial returns, despite the recent volatility in its price. In the months since demonstrators carried flaming torches and shouted “Jews will not replace us,” bitcoin has quadrupled in value. The digital currency started trading on several mainstream financial markets this month, pushing the price of a single bitcoin at times above $19,000. It was worth $16,000 at one point Tuesday.

Extremist figures who invested in bitcoin as a redoubt against efforts to block their political movement now find themselves holding what amount to winning lottery tickets. The proceeds could be utilized to communicate political messages, organize events and manage websites online even as most mainstream hosting services shun them, experts say.

“Bitcoin is permitting people in the movement to go beyond cash in an envelope or a check,” said Heidi Beirich, head of the Intelligence Project at the Southern Poverty Law Center, a nonprofit group that tracks extremists. “It’s really a boon to them.”

First created in 2009 by an anonymous computer programmer, bitcoin is a digital currency that is not issued by any government and has no physical expression, such as actual coins or bills. Someone who wants to purchase bitcoin can sign up for one of many online exchanges — each account gets a unique identifier of numbers and letters — and pay dollars (or other traditional currency) for the digital currency. People can also send bitcoin to others or handling transactions at any of a growing list of businesses, nonprofit groups and financial institutions that accept it.

A protected, continuously updated ledger called the blockchain records all transactions in a publicly visible way, allowing each an alphanumeric record. Unlike the closely government-regulated banking systems that record traditional financial transactions, the blockchain is completely decentralized, relying on complex mathematical calculations across countless computers worldwide.

Such a system makes it crucial for regulators and law enforcement agencies to monitor assets or know the identities of specific account holders. It also permits fringe groups not only to gather money, but to spend it more simply — for example, on foreign online services if U.S. companies restrict their access.

Google, GoDaddy, PayPal and others banned some far-right activists from their services after the Charlottesville rally, saying they violated rules against hate speech.

Spencer and others who have lost access to these services — processes they call being “de-platformed” — say they are completely being banned free-speech rights.

“We have faced enormous issues from being de-platformed,” Spencer said. “Bitcoin at least, from what I can tell, is not something from which we can be de-platformed.”

Extremists are hardly alone in advantaging from surging bitcoin values. Early purchasers include cryptography enthusiasts, libertarians and professional investors — as well as drug traffickers, money launderers and others who faithfully conduct transactions on the “dark Web,” a part of the Internet usable only by utilizing specialized software that assists shield online activity.

Also unaffiliated with the far right yet profiting amply is WikiLeaks founder Julian Assange, who tweeted in October that U.S. political pressure on traditional payment processors such as credit card companies to stop handling transactions for the site “caused us to invest in bitcoin — with > 50000% return.” In a dig at policymakers who pressured the companies, Assange expressed his “deepest thanks.”

It’s absurd to know how many on the far right are reaping bitcoin windfalls, but researchers who monitor acute political activity say they have detected a surge in transactions as people on the far right move assets into the digital currency and progressively use it for ordinary business purposes. The SPLC is tracking roughly 200 bitcoin wallets — the way users store the currency online — that it says are held by extremists.

Public blockchain records make such monitoring probable. Researchers can study the times, dates and amounts of any transaction, along with what accounts, or wallets, are involved. That does not include the actual names of account holders, but such records can illuminate identities. The SPLC, for example, looks on the donation pages of extremist websites for bitcoin accounts that are searching contributions.

According to SPLC research, among the most striking recent donations was 14.88 bitcoin paid to Andrew Anglin, editor of the Daily Stormer, a neo-Nazi online publication that lists a bitcoin account number online. The SPLC has labeled the Daily Stormer the nation’s “top hate site.”

The payment to Anglin appeared on Aug. 20, as the Daily Stormer — named after the Nazi propaganda tabloid “Der Stürmer” — was scrambling to recover after several Web hosting services kicked it off their platforms.

The amount of the donation carried specific significance; 1488 is a reference to a Nazi slogan — 14 words long — about the importance of securing “a future for white children,” and 88 refers to “Heil Hitler,” both words of which begin with the eighth letter of the alphabet. At the time of the donation, it was worth about $60,000. Had Anglin kept the whole amount, it would now be worth about $235,000.

Instead, it comes that Anglin gradually spent down the donation as he worked to get the Daily Stormer back onto the Web, according to John Bambenek, a cybersecurity researcher and threat-systems manager at Fidelis Cybersecurity who tracks bitcoin transactions.

But Bambenek said the account that made the 14.88 donation — whose owner is unknown — has gently drained its value over a series of transactions. Bambenek said his research suggests that this account got its money from another, far larger one, now worth more than $45 million.

“The alt-right likes bitcoin the same way criminals and people on the dark Web like bitcoin,” Bambenek said. “It’s a best way to move around assets, especially when you’re under the threat of investigation.”

Bambenek has built a Twitter bot, called the Neonazi BTC Tracker that automatically tweets a record of every transaction affecting 13 accounts he says are affiliated with known extremists and their websites.

Bambenek said there is also victim that Anglin and others are moving their assets into other digital currencies that are harder to track but have not been increasing as rapidly in value as bitcoin.

Anglin, in a phone interview with The Washington Post, declined to confirm or comment on the 14.88 bitcoin transaction, but he asserted frustration at Bambenek’s Twitter bot, saying that some of the information it tweets is faulty. Anglin also said he has utilized bitcoin almost completely since payment services blocked the Daily Stormer starting in 2014.

“Bitcoin has assisted out a lot,” Anglin said.

Anglin was sued this year by the SPLC for supposedly inflicting emotional distress on a Jewish woman in Montana by unleashing a “troll storm” on her. In a Dec. 7 article on the Daily Stormer, Anglin noted the surge in bitcoin value and said, “Thank you so, so, so much” to the law center for its long-running efforts to get him banned from mainstream payment services, prompting his investment in bitcoin. (The Daily Stormer has said in court filings that its actions were secured speech and posed no real threat to the woman, according to news reports.)

The demand of bitcoin on the political right is not confined to the most extreme components. Conservative commentator Mike Cernovich — who co-sponsored the “Deploraball” to celebrate President Trump’s induction but did not attend the Charlottesville rally and has distanced himself from anti-Semitic and white-nationalist figures — started touting the currency to his Twitter followers in September 2016, when it was worth about $600 per bitcoin.

The goal, Cernovich said, was to care for himself from efforts by tech companies or payment processors to block his political activity.

“That was the only reason I got into it,” he said. “I just got really, really lucky.”

Conservative publisher Charles C. Johnson — whose WeSearchr “bounty site” has raised more than $150,000 for the Daily Stormer’s battle against the SPLC as part of what Johnson calls his support of free speech — said he has advocated the buy of bitcoin since 2015. That’s the year Twitter banned Johnson for soliciting donations for “taking out” a Black Lives Matter activist. (Johnson said afterward that he was seeking not to incite violence but to spur an investigation he believed would undermine the activist.)

Johnson said he has made substantial earnings on bitcoin investments and increasingly uses it to make donations to political leaders and groups.

“It’s a form of digital gold,” Johnson said. “It’s not surprising that a lot of people on the political fringes would move toward an un-censorable currency.”

Spencer, however, said he did not start purchasing bitcoin when he touted it in the March tweet. In recent months, though, he has set up several accounts to increment money for different websites and causes.

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