Islamic State Mints Its First NFT – Are NFT Marketplaces Ready To Take Action?

Islamic state has reportedly created, and tried to sell its NFT. This has raised concern among experts, who fear that NFT technology could be adopted for money laundering and funding for terrorist activities.

Islamic State Experimenting with NFT Technology

As reported by The Wall Street Journal (WSJ), alarms have been raised by national security specialists regarding NFTs, which are thought to be being developed and disseminated by a ISIS or Islamic State. Terrorist organization could use blockchain technology to evade sanctions and generate funds for their terrorist campaigns.

The NFT, titled “IS-NEWS #01,” features statements that applaud Afghan-based Islamic militants for attacking a Taliban position beside a photograph of the Islamic State symbol.

Raphael Gluck, co-founder of American research company Jihadoscope, purportedly located the NFT in question on pro-ISIS social media accounts.

It is claimed that the user created two more NFTs on the 26th of August. One featured an Islamic State combatant instructing children on how to construct explosives, while the other denigrated smoking.

According to the report, this marks the first known instance of a terrorist group creating and distributing an NFT. The case has raised concerns that the immutable properties of blockchain technology may facilitate the propagation of terrorist propaganda and messaging.

This could hint that terrorist organizations are experimenting with cutting-edge technology in an attempt to identify new ways of conveying their message and raising funds.

NFT Marketplaces Take the NFT Down

According to reports, the digital token was listed on NFT marketplace OpenSea. The decentralized exchange swiftly removed the listing and terminated the account, citing a firm “zero-tolerance policy on promoting hate and violence.”

Before being taken down, the trio of NFTs were reportedly also accessible on Rarible and other NFT marketplaces. None of the NFTs appear to have been traded.

In theory, NFTs can potentially be used to raise funds or launder money via a marketplace. Extremists could plan a series of sales before moderators even have time to respond.

if such transactions were to take place on the blockchain, tracing their origins could prove to be more difficult than tracing through more traditional financial channels.

Despite their removal from public NFT marketplaces, the illicit NFTs remain permanently embedded in their respective blockchains.
All that would be required to re-access the images, is knowledge of their specific addresses, and they would be free to be distributed once more.

OpenSea Is Increasing Its Safety Measures

OpenSea recently came under fire for key concerns around trust and safety. In response to the increasing number of NFT scams, OpenSea has announced the introduction of a new feature that will automatically hide suspicious NFT transfers from view on their marketplace.

The measure was put in place to protect users from being scammed, and ensures that only legitimate transactions are made visible. The NFT marketplace has indicated its intention to make significant investment into a variety of important areas to improve both trust and safety, including against theft prevention, IP infringement, as well as to boost scaling review and moderation, along with reducing critical response times in high-touch settings.

Rising Concerns Regarding NFTs

Experts believe NFT technology could be adopted for money laundering and funding terrorist activities. Back in February, the U.S. Department of the Treasury issued a report titled “Study of the Facilitation of Money Laundering and Terror Finance Through the Trade in Works of Art.”

The study was the first to draw serious government attention toward NFTs in the context of money laundering and terrorist financing.

According to the U.S. Treasury, the study has broad implications for the NFT sector, affecting art creators, sellers, and marketplaces, due to the fact that, depending on how these entities buy and sell NFTs, they could be acting as a quasi-crypto exchange, thus violating global recommendations and regional fincrime compliance rules.

On the Flipside

In recent years, terrorist organizations have gradually come to use cryptocurrency to finance their activities based on traditional means of raising funds. The anonymity of cryptocurrency is an attractive aspect to terrorist organizations. However, according to the research its use for those means remains low.

Why You Should Care

NFT Technology has experience an exponential rise in 2021. This cutting-edge technology is a building block for blokchain-based digital culture, as well as the metaverse.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

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Author

Paulina is a writer, reporter, and digital craftswoman. Her educational background extends from anthropology to IT & multimedia. She has experience working with tech startups, as well as mastering the craft of journalism. At DailyCoin, Paulina focuses on the world of metaverses, NFT marketplaces, NFT art, and blockchains backing NFT technology.