According to a report by Reuters, interviews with seven financial crime experts and blockchain investigation experts show that the Tron blockchain has surpassed Bitcoin to become the preferred cryptocurrency transfer platform for groups designated as terrorist organizations by Israel, the United States, and other countries.
Reuters analyzed the cryptocurrency seizures announced by the Israeli security agency since 2021, which showed a sharp increase in seizures of Tron wallets for the first time, while seizures of Bitcoin wallets have decreased.
Mriganka Pattnaik, CEO of the New York blockchain analysis company Merkle Science, stated, “It used to be Bitcoin in the early days, but now our data shows that these terrorist organizations are increasingly favoring Tron.” He mentioned Tron’s faster transaction times, low fees, and stability.
Reuters analysis found that the Israeli National Bureau for Counter Terror Financing (NBCTF) froze 143 Tron wallets between July 2021 and October 2023, believing that these wallets were related to “designated terrorist organizations” or used for “severe terrorist crimes.”
In Israel’s seizures of Tron wallets, nearly two-thirds (87) were carried out this year, including 39 wallets claimed by Israel in June to belong to Hezbollah in Lebanon, and 26 wallets claimed by the country in July to belong to the Palestinian Islamic Jihad. Additionally, NBCTF stated that 56 seized Tron wallets were related to Hamas.
Possible reasons for the shift to Tron
In Israel, the number of Bitcoin seizures is relatively rare compared to Tron. In 2021, the country froze 30 Bitcoin wallets, the first year of seizure announcements by NBCTF, and no Bitcoin wallets appeared in subsequent years’ announcements.
The Financial Action Task Force (FATF) warned last month that terrorist organizations are trying to further increase the anonymity of donors and mentioned the increasing popularity of Tether transfers on the Tron network. Four sources indicated that law enforcement agencies’ enhanced ability to track Bitcoin transactions has led such organizations to turn to Tron.
Shlomit Wagman, a senior researcher at Harvard University, stated that Tron initially received less attention from blockchain analysis companies, and “this blind spot still exists until now.”
The investment firm VanEck stated that transaction fees on Tron are much lower than Bitcoin. Wagman mentioned that radical organizations are also using stablecoins on Tron, rather than the more volatile Bitcoin, to ensure “the value of their cryptocurrencies is preserved.”
Shortly after the Reuters report was released, Tron founder Justin Sun posted on X platform mentioning Tron’s involvement in combating terrorist financing, possibly in response to the report. He stated: