Bitcoin, crowdfunding used by white supremacists, far-right extremists

A mysterious $500,000 Bitcoin transfer. Online stores selling sham nutritional supplements and buckets of protein powder. Inane, live-streamed video game sessions, full of dog whistles and racial slurs, fed by a steady flow of cryptocurrency donations in the form of virtual lemons.

Some of the income streams exploited by America’s extremist movements have come under increased scrutiny after last month’s attack on the U.S. Capitol, for which some far-right extremists fundraised online. 

Even as extremists are removed from platforms that serve as reliable sources of followers and money, they find new ways to wring financial support from an army of online haters.    

“A good analogy is that for every five people who would buy a $20 T-shirt, there’s probably 500 people who would pay a dollar or 50 cents to their favorite streamer to hear them say the N-word or mock minorities online,” said Megan Squire, a computer science professor at Elon University who has studied how extremists fundraise online. “The numbers are substantially larger, both in the number of people participating and the number of times they donate.”

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Hate groups move from selling CDs to taking PayPal

In the 1980s and 1990s, when hate groups operated exclusively on terra firma, they raised money three ways: selling music and merchandise like T-shirts, holding events like concerts, and charging members annual or monthly dues, said Heidi Beirich, chief strategy officer of the Global Project Against Hate and Extremism. She has tracked extremist organizations for more than 20 years.

Those were lucrative times for hate groups, Beirich said. The music trade, especially, brought in a lot of money for American groups that exported cassette tapes and CDs to skinheads and other extremists in Europe, where hate-filled music was banned in many countries.

“The Americans would ship it into Europe and it was like an illicit product, so it had a premium,” Beirich said. “The music business was so profitable that Europol put out a study in the late ’90s saying that it rivaled the hashish trade in Europe.”

In the mid-2000s, hate groups largely shifted online and discovered PayPal and Amazon, Beirich said. For more than a decade, just about every extremist group’s website featured a PayPal button, she said. Many extremist organizations posted Amazon links on their websites, which kicked back money for every dollar their followers spent after clicking through. 

That was the heyday of online fundraising for groups like the white supremacist organization American Renaissance, Beirich said. But online platforms started clamping down on extremists in about 2015. By August 2017, PayPal, GoFundMe and other payment processors had begun banning people associated with far-right extremism and white supremacy.

That month, the deadly white supremacist rally in Charlottesville, Virginia, opened many Americans’ eyes to the far-right movement feeding off the election of President Donald Trump. Spurred by images of white supremacists chanting “Jews will not replace us” in the center of an American city, platforms that had started targeting individuals and groups who spread hate accelerated their efforts.

“I remember the year before Charlottesville, I went to the DC offices of PayPal with a PowerPoint showing screenshots of all the hate groups — Klan groups, Nazis, everything, and how they all had PayPal accounts and the guy at the time was like, ‘I don’t see what the problem is.’” Beirich said. “Well, the Tuesday after Charlottesville, we got a call from the general counsel at PayPal saying, ‘What do we need to do?’”

A spokesman for PayPal disputed Beirich’s account and said the company took extremist fundraising seriously for years before Charlottesville.

“PayPal has a longstanding and consistently enforced Acceptable Use Policy, and we remain deeply committed to working to ensure that our services are not used to accept payments for activities that promote hate speech, violence or other forms of intolerance,” said PayPal spokesman Justin Higgs. He provided examples of articles outlining PayPal’s actions against extremists pre-Charlottesville.

But as payment processors and mainstream crowdfunding sites began shutting their doors to extremists, many in the movement were already migrating to a new income stream: cryptocurrency. 

Cashing in on cryptocurrency

On Dec. 8, 2020, someone sent at least a dozen far-right groups and personalities 28.15 Bitcoin in a single transaction, valued at approximately $522,000, according to the blog Chainalysis Insights, which covers cryptocurrency news.

The recipients included Nick Fuentes, a 22-year-old far-right internet personality who has been banned from YouTube and other platforms because of his hateful content. The Daily Stormer, a neo-Nazi website, and a French Holocaust denier also received some of the money.

Fuentes received the lion’s share: 13.5 Bitcoin worth about $250,000. On Jan. 6, he protested outside the U.S. Capitol, though he maintains he did not incite the insurrection or enter the building.  

The Bitcoin donation was traced to a terminally-ill French programmer with a history of supporting far-right groups. While it was notable for its size, the donation was just one of thousands made to extremist groups over the last few years, according to John Bambenek, who has tracked Bitcoin donations to such groups and publicizes them under the Twitter handle @NeoNaziWallets.

Bambenek said there are a number of reasons the far-right is attracted to Bitcoin and other cryptocurrencies. They wrongly assume Bitcoin is anonymous, when in fact every transaction can be viewed by anyone.

And there’s a philosophical reason.

“The neo-Nazi, anti-Semitic wing of the alt-right in particular, they believe their own propaganda about the whole Jewish world conspiracy — that the Jews own all the banks and so forth,” Bambenek said. “Well, if you really believe that, and you don’t want to be part of that, then cryptocurrency is all you have left.”

The Daily Stormer, led by neo-Nazi troll Andrew Anglin, has been particularly vocal in its support for cryptocurrency. So has white supremacist media personality Christopher Cantwell, who gained notoriety as the “Crying Nazi” after he posted a video of himself weeping about being charged with a crime after the Charlottesville rally.  He later pleaded guilty to assault. 

Recently, the Daily Stormer stopped asking readers for Bitcoin and shifted to Monero, a cryptocurrency with in-built privacy features that experts say make it all but untraceable.

“If the government wants to see the records underlying Monero, they’re screwed,” said Danny Nelson, who writes about cryptocurrency for the website CoinDesk. “The Monero blockchain doesn’t record that information in a way for it to be retrievable.”

But he said law enforcement agencies and others can limit extremist trade in cryptocurrencies by monitoring the “entry and exit points” for Bitcoin, Monero and others. 

“It’s all well and good that you have all this Monero, but what are you going to do with it?” Young said. “As soon as you take it to an exchange to cash it out, then that is an event that can be associated with you.”

In order to buy most goods and services with cryptocurrency, one has to transfer it into U.S. dollars, Euros or another fiat currency, which means passing it through a cryptocurrency exchange. And, like payment processors a few years ago, those exchanges are wising up to the fact that extremists are using their services. 

Elliott Suthers, a spokesman for Coinbase, the largest cryptocurrency exchange, said the company’s “compliance programs are modeled on those of the world’s most trusted global banks and are specifically designed to identify and restrict the activities of any bad actors on our platform.

“We work closely with law enforcement agencies globally and do not hesitate to cooperate with investigations, when necessary.”

Video streaming revenue goes crypto

Many of the most well-known members of the far-right owe their fame, and their net worth, to one platform: YouTube. 

For years, YouTube allowed white supremacists and other hate groups to post extremist videos on its platform, racking up tens of thousands of subscribers and raking in advertising dollars. Experts say the site radicalized more users than any other platform on the internet. 

“When you talk to folks who were in the (white supremacist) movement, or when you read in the chat rooms these people talk in, it’s almost all about YouTube,” Squire said.

“Their ‘red pill’ moment is almost always on YouTube,” Squire said, using the far-right’s term to describe when someone buys into a conspiracy theory or the beliefs of an extremist group. 

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YouTube finally started banning large numbers of hateful accounts in June 2019. Another wave followed in 2020 when YouTube removed channels run by white supremacists Richard Spencer, David Duke and others.

Unable to monetize their hate on the world’s biggest video platform, the far-right scattered across the internet. Some groups started podcasts. Other personalities, who were dependent on their video-streaming for followers, decamped to a gaming-centric, youth-focused video streaming website called DLive.

Squire, who has made it her life’s mission to follow hate groups and far-right media personalities into the deepest bowels of the internet, started collecting data from DLive last year. Though it doesn’t have the reach of YouTube, the site offered something else: the ability for viewers to donate in real-time using cryptocurrency.

A report by the Southern Poverty Law Center in November laid out Squire’s findings,  revealing that several of the leaders of the white nationalist movement, including Fuentes and Daily Stormer writer Robert “Azzmador” Ray, made a lot of money on DLive. Viewers on the site could buy credits or earn them by watching videos, and they passed those credits on to live-streamers, Squire found.

“Credits are accrued over time by watching livestreams aired on DLive and come in the form of ‘lemons,’ with each lemon valuing at $0.012,” the SPLC reported. “The fake currency lemons, which are more commonly accrued by a user transferring money into their own account, can then be turned into cash donations, given from DLive account holders to extremists.”

Fuentes amassed more than $61,000 on the site from April through October, Squire reported. A far-right comedian named Owen Benjamin was the highest earner on DLive, making $62,000.

Squire identified 56 extremist accounts that raked in $465,572.43 from April to October.

DLive suspended the accounts of Fuentes, Benjamin and several other streamers after Squire’s report was published. Fuentes has since tried to launch his own streaming service, but without a platform, his anti-Semitic and racist views reach far fewer people, Squire said.

“The problem for them is there aren’t a lot of sites that will let you stream live and make money,” Squire said. “The live aspect is really important to this culture, and finding sites that will let you get away with that and have a decent interface is pretty rare.”

Back to T-shirts: fundraising comes full-circle  

With online fundraising hobbled and facing an army of sleuths who report their hate speech, there are signs extremists are returning to fundraising methods used decades ago. 

In 2019, by studying payments made on the app Venmo, Squire concluded that members of the far-right group the Proud Boys were paying dues. Proud Boys leader Enrique Tarrio has long denied that his members pay dues. He has said his main source of income is selling T-shirts and other merchandise to fellow Proud Boys.

Tarrio’s merchandise gambit backfired on him in January when he was arrested in Washington, D.C., carrying two high-capacity ammunition magazines emblazoned with the Proud Boys logo. Tarrio told police he was delivering the magazines to someone who had bought them from him online.

High-capacity magazines are illegal in the District of Columbia. Tarrio was charged with two felonies and faces years in federal prison.

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Another far-right leader who has invested heavily in the merchandising trade is conspiracy theorist Alex Jones.

Jones, who uses his Infowars website to hock products with names like “Alpha Power” and “Super Male Vitality,” has been banned from most mainstream social media platforms and YouTube, where he once marketed his snake oils to millions of fans.

A quick perusal of the website last week indicates Jones is trying to move those products. Every one of the supplements on the “best sellers” list was discounted, some by as much as 60 percent.

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