Protesting anti-vax truckers blockading downtown Ottawa, Canada had their fund-raising platform shut down because their host fears the “promotion of violence.” The protesters move to a Bitcoin crowdsourcing funding service. It quickly raised $900,000.
Russian troops gather on Ukraine’s borders. Ukrainian NGOs and volunteer groups embrace cryptocurrencies to help defend their country in the event of a coming war, according to a Feb. 8 investigation by Elliptic, a blockchain analytics firm.
Recent reports like these raise the question: Are Bitcoin and other cryptos becoming the preferred fundraising platform for political protesters and social movements — given that cryptocurrencies don’t respect national boundaries and are relatively censorship-resistant? And, if so, should one be concerned?
Some find it problematic, after all, that the same fundraising platform that enables a freedom fighter can also provide funds to a racist or terrorist group. Also, most Canadian citizens were not supporting the truckers’ blockade of downtown Ottawa, according to the New York Times. If true, is Bitcoin being used as a tool to undermine democratic processes?
“Cryptocurrency has proved to be a robust and growing alternative (to traditional currency) — especially when it comes to donations from other countries,” said Elliptic. Bitcoin donations to Ukrainian volunteer groups to buy military equipment, training services and medical supplies for a possible war surpassed $500,000 in 2021, a tenfold increase from the previous year, it noted.
“One of the benefits of Bitcoin is its censorship resistance,” Bitcoin payment processor OpenNode wrote last year. “Without any central authority to dictate who can and can’t use Bitcoin, it has proven to be the currency of choice for many individuals and organizations who have been left out of traditional payment methods.”
Pandora’s box has been opened
This trend is only likely to continue, some believe. “Social movements will eventually raise money through blockchain-based crowdfunding platforms,” Erica Pimentel, assistant professor at the Smith School of Business at Queen’s University in Canada, told Cointelegraph. There is little incentive to use centralized fundraising platforms like GoFundMe — the Canadian truckers’ original platform before it pulled the plug on them — when campaigns on these platforms can be so easily shut down. “There is no way to put the lid back on Pandora’s box,” she said.
To be sure, Bitcoin has been a fund-raising tool for some time now. Jailed Russian dissident Alexei Navalny’s political movement has been receiving BTC donations since 2016, though inflows picked up significantly in 2021. As of February 16, 2022, the movement has received a total of 667 BTC, worth more than $29 million at the time of writing, according to the Bitcoin address that the group is promoting.
In Belarus — a former Soviet republic like Ukraine — the Belarus Solidarity Foundation (BYSOL) has been taking crypto donations to support political victims of that nation’s security forces following street protests in the wake of the disputed 2020 presidential elections. The foundation pays demonstrators’ fines, among other things, and has been using cryptocurrencies from the beginning because “it is very difficult for the Belarusian authorities to stop these flows,” said Andrei Strizhak, head of BYSOL.
Bypassing financial institutions is often a big reason cited for embracing blockchain-based fundraising. “In some cases, we found that financial institutions had closed accounts belonging to these fundraising campaigns,” said Elliptic, adding:
“This cannot happen with a crypto wallet. Cryptocurrency is also particularly suited to cross-border donations, allowing easier access to wealthy overseas donors.”
Extremist groups have also used Bitcoin to raise money. Daily Stormer, a neo-Nazi group, for example, received 15 BTC from an anonymous donor in August 2017, its largest donation ever, only a week after participating in a white supremacist rally in Charlotteville, Virginia that turned deadly. Bitcoin became the group’s main source of funding after Daily Stormer was banned by Paypal and cut off from credit card firms, according to a PBS Frontline report, which spoke with Beth Littrell, a lawyer for the Southern Poverty Law Center. Littrell observed:
“It’s grown harder to use the legal system to stamp out hate groups because now they operate with online networks and virtual money. ‘We were able to sue the Ku Klux Klan, a terrorist organization, in essence out of existence.’ […] Doing the same today is much harder, she said. ‘The law is evolving but lagging behind the harm.’”
Alternative pressure points
“Of course, we can all agree that we want the government to get in the way of Neo-Nazi movements,” Pimentel told Cointelegraph. “However, there are other ways to get in the way of these types of movements even if they are raising money online through crypto-based platforms.”
The Daily Stormer was eventually kicked off the web by its web hosting company GoDaddy and later removed from Google’s search engine, noted Pimentel, adding that TallyCoin, the Bitcoin crowdsourcing funding service used by the Ottawa truckers now, is also hosted by GoDaddy. “Therefore, there is the possibility to put pressure on web hosting firms or search engines to effectively cut off access to crypto-based fundraising platforms,” she said.
Asked whether decentralized fund-raising was generally a good thing or a bad thing, Pimentel answered that it really hinges on “whether we agree with the ideology of the social movement in question.” Many might agree in supporting a group or foundation promoting democracy in the face of an authoritarian government. “I think we can all agree that these folks should have access to funds in a way that is tamper-proof and cannot be shut down.”
But, in the event that an organization uses Bitcoin to sow discrimination and hate, “We would hope that the government would intervene,” she told Cointelegraph, adding:
“I do worry that blockchain-based crowdfunding will be co-opted by nefarious groups and it will become increasingly difficult to stop them.”
Others argue that BTC and other cryptocurrencies are simply tools — whether they are used for good or ill is really up to the people using them. The same can be said about anonymity, Marta Belcher, a cryptocurrency and civil liberties attorney, told Cointelegraph, further explaining:
“The fact that a technology could be used anonymously does not mean that there is something wrong with that technology. Nor should we call for a ban on a particular technology merely because it could be used in ways we don’t like.”
“We don’t blame Ford when one of their cars is used as a getaway vehicle in a bank robbery,” Belcher added.
More regulation
Governments may, nonetheless, insist on some modicum of oversight or regulation. Just recently, the Canadian government announced an expansion of its Anti-Money Laundering and Terrorist Financing law to include crowdfunding platforms and payment service providers, continued Pimentel, and “the deputy prime minister specified that crypto transactions would be included in this measure.”
Under the act, crowdfunding platforms and payment services providers linked to them including crypto-based ones must register with the Financial Transactions and Reports Analysis Centre of Canada. “This means that these platforms will have to report crypto transactions worth over $10,000 Canadian dollars or crypto transactions labeled as suspicious,” Pimentel said.
The act applies to Canadian businesses and international businesses doing business in Canada. This raises the question whether it will simply discourage firms from doing business in Canada.
After all, it can be expensive to put in all the processes needed to comply with the law. Pimentel worries that it might have the unintended consequence of imposing significant compliance expenses on Canadian firms, while “pushing folks who want to skirt the reporting requirements to simply use firms abroad.”
Tonight in #Ottawa, the Freedom Convoy protest continues for the 19th day #FreedomConvoy pic.twitter.com/RFl0epGPvi
— Lisa Bennatan (@LisaBennatan) February 16, 2022
Any turning back?
Overall, given that Bitcoin and other cryptocurrencies are borderless and relatively censorship-resistant, is there any turning back the clock on this trend? Will most social movements eventually raise funds globally and through blockchain-based crowdfunding platforms? Pimentel said:
“I think that, going forward, using decentralized forms of financing that are difficult for governments to interfere with will become the norm.”
And this process is likely to continue to incite controversy because it is always difficult to separate the means, for example Bitcoin (BTC), from the ends, such as vaccination mandates. Also, arguments about the rightness of a given cause are unlikely to be resolved, if history is any guide. One person’s hostage-taker can still be another person’s freedom fighter.
Source: Cointelegraph
