Terrorism financing and cryptocurrencies

Abstract

Purpose This study aims to examine here various (nonlinear) time-series comovements between daily changes in both prices and trading volumes of five popular cryptocurrencies (Bitcoin, Ethereum, Ripple, Dogecoin and Tron) and diverse types of terror attacks, by all known terrorist organizations (though the authors later focus on the most active ones), across different geographic regions and through lead/lag relations, from July 2010 to July 2021. Design/methodology/approach The authors form 130 dedicated subsamples and use wavelet coherence analyses that provide numerous highly detailed and informative heatmaps. Findings The authors find that the six most active terrorist organizations (Al-Qaida, Taliban, Al-Shabaab, Boko Haram, Houthi and the Islamic State) exhibit mostly short-term comovements with a variety of crypto assets. Occasionally, these interactions last for longer periods of time. Assorted terrorist groups often leverage on periodic adaptations in the prices and trading volumes of crypto assets to enhance their ongoing financing and possibly to adjust their global operations. Practical implications The high-resolution findings and inferences can serve worldwide agencies to better comprehend the relationships between different crypto assets and global terrorism and therefore counter terrorism financing more effectively. Originality/value The authors overcome research gaps in existing literature, where the topic was partly engaged over shorter time frames, through truncated samples and strictly with Bitcoin.