Tron The Dark Web’s New Darling after Bitcoin

Tron The Dark Web's Latest Obsession Surpassing Bitcoin

Author: Tom Wilson and Elizabeth Howcroft

Translation: Aiying

Israel Discovers Cryptocurrency Network Tron on New Anti-Terrorist Battlefield

In the new battlefield of global counterterrorism, Israel faces an unexpected challenge: a rapidly emerging cryptocurrency network called Tron. This network has become a new channel for the flow of funds for radical organizations supported by Iran, such as Hamas and Hezbollah.

According to analysts specializing in transactions, Tron has gradually become the preferred method of transfer for terrorist organizations due to its fast transaction speed and low fees, surpassing the once popular choice, Bitcoin.

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Recent data from Israeli security agencies shows that they are gradually increasing efforts to crack down on Tron wallets, while the attention on Bitcoin wallets has decreased. The reason behind this shift is obvious: terrorist organizations’ growing preference for Tron.

Mriganka LianGuaittnaik, CEO of Merkle Science, explains, “These organizations are increasingly favoring Tron because it is fast, low-cost, and stable.” Merkle Science provides services to law enforcement agencies in multiple countries, including the United States, the United Kingdom, and Singapore.

On October 7th of last year, Hamas launched an attack on Israel, resulting in approximately 1,200 fatalities. Subsequently, Israel’s retaliatory actions in Gaza led to approximately 14,000 deaths. In response to this series of events, Israel has intensified its monitoring of Hamas’ sources of funding.

In response to accusations of terrorist organizations using Tron, Hayward Wong, a spokesperson for Tron, stated, “All technologies can be abused, just like the US dollar is sometimes used for money laundering. Tron cannot control who uses its technology and is not associated with the organizations Israel accuses.”

It is reported that most of the Tron funds confiscated by Israel this year are related to groups it considers terrorist organizations, including Hamas, Hezbollah in Lebanon, and the Palestinian Islamic Jihad. These organizations have all been involved in attacks against Israel. In addition, Israel also uncovered Tron wallets related to the currency exchange company “Dubai Co. For Exchange,” which is linked to Hamas.

Israel Freezes 600 Cryptocurrency Accounts Suspected of Being Linked to Hamas in Counterterrorism Operation

In the weeks following the Hamas attacks, Israel launched its largest counterterrorism operation to date, freezing approximately 600 accounts associated with “Dubai Co.” Although the specific types of cryptocurrencies used in these accounts have not been publicly disclosed, I have learned from some of the account holders that they used Tron cryptocurrency.

The account holders claim that they use cryptocurrency for business or personal financial needs and deny any connection to Hamas or the Islamic Jihad. One individual named Neo admits that he may have conducted financial transactions with individuals associated with Hamas.

The Israeli authorities view “Dubai Co.” as part of a terrorist organization and claim that the company provides substantial financial support to the military wing of Hamas each year. I have tried to contact a representative of “Dubai Co.” whose email address appeared in the confiscation order, but have not received a response yet.

Since 2019, the military department of Hamas has been using cryptocurrencies for fundraising. In April of this year, they announced that they would no longer use Bitcoin for fundraising, citing increasing efforts to prevent their fundraising. However, their statement did not mention Tron.

I have been trying to confirm whether Hamas has actually used Tron, but have not yet obtained conclusive evidence. The Israeli Counter-Terrorism Financing Agency has also not responded to questions about how they identify wallets involved in Tron and how they link these wallets to radical groups. Hamas, Hezbollah, and the Islamic Jihad Organization have also not responded to my inquiries.

Prior to the announcement of the confiscation of Tron wallets in Israel, I contacted six individuals who were named, and they all denied any affiliation with any radical groups. These individuals are from different regions, including Venezuela, Dubai, and Jenin City in the West Bank.

Israel freezes funds for Iranian-sponsored terrorist groups, Tron cryptocurrency network under scrutiny

In June of this year, Israel announced the freezing of a batch of funds that were allegedly intended for use by Iranian-sponsored terrorist groups. Iran openly supports Hamas, Hezbollah, and the Islamic Jihad Organization, considering these groups as part of its “Axis of Resistance” against Israeli and U.S. influence in the Middle East. However, Israel’s announcement did not explicitly state whether the funds originated directly from Iran. The Iranian Ministry of Foreign Affairs has not responded to questions about whether Iran uses Tron cryptocurrency to provide funds for these groups.

A report last year revealed that Iranian companies conducted transactions worth up to $8 billion through the Tron network, which was seen as a means for Iran to evade U.S. sanctions. These transactions took place between 2018 and 2022.

In the cryptocurrency field, although transaction amounts and electronic wallet addresses can be traced on the blockchain, identifying the true identities behind the transactions remains a challenge. This is particularly difficult for those outside of law enforcement or the cryptocurrency trading field to determine the ultimate destination of the funds.

The experts I consulted pointed out that the cryptocurrency “Tether” on the Tron network is the mainstream medium of exchange. As the world’s largest “stablecoin,” Tether aims to maintain a value pegged to the U.S. dollar at a 1:1 ratio, backed by a range of reserve assets. Tether’s company stated in their announcement that they actively track and freeze “tokens used for illegal purposes” and cooperate with law enforcement agencies.

According to CoinGecko’s data, Tether is currently the third largest cryptocurrency by market capitalization, with a market cap of $89 billion, an increase of about one-third compared to last year. Although Tether may not be well-known outside of the cryptocurrency community, it is the primary medium for Tron transactions, currently holding $48 billion worth of Tether. According to data from the official Tether website and data company Messari, Tron’s average daily trading volume reached 9.1 million transactions from April to June this year, an increase of over 70% compared to the same period last year.

Tron’s founder Justin Sun was sued by the U.S. Securities and Exchange Commission in March this year, accusing him of artificially inflating trading volume and unlawfully selling Tron tokens without registration. In response, Sun stated that the allegations by the U.S. Securities and Exchange Commission are unfounded. Sun’s representative, Deng Binbin, advised me to refer to the statement by Tron spokesperson Wang regarding these allegations.

From Bitcoin to Tron: New Trends in Cryptocurrency Financing for Terrorist Organizations

Since Bitcoin’s first appearance in 2008, cryptocurrencies have continuously attracted the attention of criminals. According to data from cryptocurrency tracking agency Chainalysis, the proportion of illicit transactions in all cryptocurrency transactions in 2022 has dropped to 0.2%, compared to 2% three years ago.

Israel’s counterterrorism efforts have shown a shift in trends. In 2021, they froze 30 Bitcoin accounts, but in the following years, actions to freeze Bitcoin accounts almost came to a halt. In contrast, transactions on the Tron network have garnered more attention.

The Financial Action Task Force (FATF), a G7 organization based in Paris, recently issued a warning, pointing out that terrorist organizations are seeking to make their donors more anonymous, and Tether transactions on the Tron network have become a focus due to its growing popularity.

Why this shift? Some experts believe that as law enforcement agencies enhance their ability to trace Bitcoin transactions, these organizations are turning to the use of Tron.

Shlomit Wagman, a senior researcher at Harvard University who served as the director of the Israeli Anti-Money Laundering and Counter-Terrorist Financing Authority from 2016 to 2022, pointed out that Tron initially did not attract much attention from blockchain analysis companies and was considered a “neglected corner.”

Analysis by the U.S. investment firm VanEck shows that Tron’s transaction fees are much lower than Bitcoin’s. Wagman added that extremist organizations prefer to use stablecoins on Tron rather than more volatile Bitcoin to “protect the value of their cryptocurrencies.”

So, today I want to introduce to you Tron – a cryptocurrency network that may be used for financing by terrorist organizations. Although Tron may not yet be familiar to the general public, that doesn’t mean it doesn’t exist. That’s the story I want to share with you today.

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