Welcome to the enigmatic and frequently problematic world of cryptocurrency. In Episode 18 of The Cybersecurity & Geopolitical Discussion, Lisa Forte, Partner at Red Goat Security, Phil Ingram, MBE, of Grey Hare Media and Ian Thornton-Trump, CD, Chief Information Security Officer (CISO) at Cyjax discuss the wide-ranging impact crypto has on geopolitical and economic conflict.

The trio dives straight into the sensational trial of Sam Bankman-Fried, who was found guilty on all seven counts relating to the collapse of FTX, which could land him 115 years in jail depending on how much momentum there is for an appeal. His attorney Mark Cohen said Bankman-Fried respects the jury's decision, but maintains his innocence and will continue to "vigorously fight the charges." So, yet another chapter in the saga may unfold.

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A look at the Bankman-Fried trial

The background to the Bankman-Fried trial was straightforward. The FTX exchange fell into bankruptcy after users found they could no longer withdraw their funds, worth billions of dollars in aggregate. The money was funneled into sibling company, Alameda Research, and used for stock trades, political donations and funding Bankman-Fried’s extravagant lifestyle. He also flamboyantly ignored his lawyer's advice and prior to the trial he conducted many media interviews as well as written testimony to Congress and then, as part of the final trial proceedings, appeared on the witness stand to defend himself. It's safe to say the jury was unimpressed as he crumbled against all the evidence he himself had provided to government prosecutors due to his public statements.

Cryptocurrency and the Israel-Hamas war

Next on the agenda is the overt Iranian funding of the Hamas terrorist organization. Some 11 days after the terrorist attack on Israel, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on 10 key Hamas terrorist group members, operatives and financial facilitators in Gaza and elsewhere, including Sudan, Turkey, Algeria and Qatar. This action targets members managing assets in a Hamas investment portfolio, a Qatar-based financial facilitator with close ties to the Iranian regime, a key Hamas commander, and a Gaza-based virtual currency exchange and its operator. Further investigations revealed cryptocurrency and exchanges had played a massive part in providing the funds to conduct the sinister attack. It appears financial sanctions against terrorist organizations were bypassed by cryptocurrency exchanges despite intelligence of digital-currency wallets connected to Hamas receiving about $41 million over the past two years, from Tel Aviv-based crypto analytics and software firm BitOK, as well as information on Palestinian Islamic Jihad receiving $93 million in crypto during the same period, based on crypto researcher Elliptic’s data.

The geopolitical power of crypto

Zooming out of these specific revelations, the panel examines the wider implications of nation-state sanction avoidance, the ability to effectively bypass the American financial system and the role of cryptocurrencies in funding global political movements — somewhat anonymously. There are rather chilling revelations as cryptocurrencies are found at the very center of political agendas, disinformation campaigns and financial transactions between countries subject to economic sanctions by both U.S. and EU/U.K. governments. Despite analysis proclaiming that far more legitimate and legal transactions are occurring on cryptocurrency blockchains than illegitimate and illegal, the simple conclusion is that we don't know how bad the problem is until the damage has already been done.