Tron, a fast-growing cryptocurrency network, has overtaken Bitcoin as a platform for crypto transfers associated with groups designated as terror organisations by Israel, the United States, and other countries. The trend is reflected in a Reuters analysis of crypto seizures announced by Israeli security services since 2021, showing for the first time a sharp rise in the targeting of Tron wallets and a fall in Bitcoin wallet seizures.

Why Terrorist Groups Are Turning to Tron

There are several reasons why terrorist groups are turning to Tron. First, Tron is faster and cheaper than Bitcoin. Second, Tron is more stable than Bitcoin, which means that the value of crypto held on Tron is less likely to fluctuate. Third, Tron is less scrutinised by law enforcement than Bitcoin, which means that it is easier for terrorist groups to use Tron to transfer funds without being detected.

Israel's Response to the Shift to Tron

Israel has responded to the shift to Tron by increasing its scrutiny of Tron transactions. In 2023, Israel froze 143 Tron wallets that it believed were connected to a "designated terrorist organisation" or used for a "severe terror crime."

Hamas, Hezbollah, and Islamic Jihad

Almost two-thirds of Israel's Tron seizures – 87 - were this year, including 39 wallets that Israel said in June were owned by Lebanon's Hezbollah, and 26 it said in July belonged to Palestinian Islamic Jihad, a Hamas ally that joined the assault on Israel from Gaza.

The seizures have also included 56 Tron wallets NBCTF said were linked to Hamas, including 46 in March last year connected to a single Gaza-based money exchange company called Dubai Co. For Exchange.

Iran's Role

In the June statement, Israel said it seized funds "intended for use by the terrorist organisations financed by Iran." Iran counts Hamas, Hezbollah, and Islamic Jihad in a so-called Axis of Resistance opposing Israeli and American power in the Middle East.

The Role of Tether in Tron-Based Terrorist Financing

The cryptocurrency Tether is also playing a role in Tron-based terrorist financing. Tether is a stablecoin, which means that its value is pegged to the US dollar. This makes Tether an attractive option for terrorist groups, as it allows them to transfer funds without having to worry about the value of their crypto fluctuating.

The Future of Tron-Based Terrorist Financing

It is likely that terrorist groups will continue to use Tron for financing their activities. Law enforcement agencies will need to continue to develop their capabilities to trace transactions on Tron in order to disrupt terrorist financing.

Tron's Growing Popularity

Despite its lack of name recognition outside crypto circles, Tron is the dominant blockchain for Tether transactions, currently hosting $48 billion of the tokens, according to Tether's website. Average daily transactions on Tron hit 9.1 million from April-June, according to data firm Messari, up over 70% from the same period last year.

Law Enforcement's Challenge

The illicit share of all crypto transaction volumes was 0.2% in 2022, down from 2% three years earlier, according to blockchain tracker Chainalysis. However, the increasing use of Tron by Iran-backed militant groups poses a new challenge for law enforcement agencies.

Other Factors to Note

- Tron is the dominant blockchain for Tether transactions, currently hosting $48 billion of the tokens.

- Justin Sun, who founded Tron in 2017, was sued by the U.S. Securities and Exchange Commission in March for allegedly artificially inflating trading volumes and selling Tron tokens as an unregistered security.

- The Financial Action Task Force, a Paris-based G7 body that fights illicit finance, warned last month that terrorist organisations were seeking to further boost donor anonymity, citing the growing popularity of Tether transfers on Tron.