Protesting anti-vax truckers blocking downtown Ottawa, Canada, have had their fundraising platform shut down because their host fears the ‘promotion of violence’. Protesters are turning to a Bitcoin crowdfunding service. It’s fast raised $900,000.
Russian troops gather at the borders of Ukraine. Ukrainian NGOs and volunteer groups are embracing cryptocurrencies to help defend their country in the event of impending war, according to to a February 8 survey conducted by Elliptic, a blockchain analytics firm.
Recent reports like these beg the question: Are Bitcoin and other cryptos becoming the preferred fundraising platform for political protesters and social movements – given that cryptocurrencies do not respect national borders? and are relatively resistant to censorship? And if so, should we 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. Moreover, most Canadian citizens did not support the blockade of truckers in downtown Ottawa, according to at the New York Times. If true, is Bitcoin being used as a tool to undermine democratic processes?
“Cryptocurrency has proven to be a robust and growing alternative (to traditional currency) – especially when it comes to donations from other countries,” Elliptic said. Bitcoin donations to Ukrainian volunteer groups to purchase military equipment, training services and medical supplies for a possible war topped $500,000 in 2021, a tenfold increase from the previous year, a he noted.
“One of the advantages of bitcoin is its resistance to censorship”, bitcoin payment processor OpenNode wrote Last year. “With no central authority to dictate who can and cannot use Bitcoin, it has proven to be the currency of choice for many people and organizations who have been locked out of traditional payment methods.”
Pandora’s box has been opened
This trend is only set to continue, some believe. “Social movements will eventually raise funds 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 original Canadian truckers’ platform before it unplugged them – when campaigns on these platforms can be so easily shut down. . “There’s no way to put the lid back on Pandora’s box,” she said.
Admittedly, Bitcoin has been a fundraising tool for quite some time. Imprisoned Russian dissident Alexei Navalny’s political movement has been receiving BTC donations since 2016, though influxes picked up significantly in 2021. Since February 16, 2022, the movement has has received a total of 667 BTC, worth over $29 million at the time of writing, according to the bitcoin address the group is promoting.
In Belarus – a former Soviet republic like Ukraine – the Belarusian Solidarity Foundation (BYSOL) has received crypto donations to support political victims of that country’s security forces. following street protests following the disputed 2020 presidential elections. The foundation, among other things, pays protesters’ fines and has been using cryptocurrencies since the beginning because “it is very difficult for the Belarusian authorities to stop these flows”. noted Andrei Strizhak, director of BYSOL.
Bypassing financial institutions is often an important reason cited for adopting blockchain-based fundraising. “In some cases, we found that financial institutions had closed accounts belonging to these fundraising campaigns,” Elliptic said, adding:
“That cannot happen with a crypto wallet. Cryptocurrency is also particularly suitable for cross-border donations, allowing easier access to wealthy foreign donors.
Extremist groups have also used Bitcoin to raise funds. Daily Stormer, a neo-Nazi group, for example, received 15 BTC from an anonymous donor in August 2017, its largest donation ever, just a week later. participant at a rally of white supremacists in Charlotteville, Va., that turned deadly. Bitcoin became the group’s main source of funding after the creation of Daily Stormer banned by Paypal and cut off from credit card companies, according to a report by PBS Frontline, who spoke with Beth Littrell, an attorney at the Southern Poverty Law Center. Littrell observed:
“It has become more difficult to use the legal system to root out hate groups as they now operate with online networks and virtual money. “We were able to pursue the Ku Klux Klan, a terrorist organization, which has essentially disappeared.” […] Doing the same today is much more difficult, she says. “The law is evolving but still lagging behind evil.”
Alternate pressure points
“Of course, we can all agree that we want the government to stand in the way of neo-Nazi movements,” Pimentel told Cointelegraph. “However, there are other ways to impede these types of moves, even if they raise money online through crypto platforms.”
The Daily Stormer was eventually launched on the web by its web hosting company GoDaddy and then removed from Google’s search engine, Pimentel noted, adding that TallyCoin, the bitcoin crowdfunding service used by Ottawa truckers now , is also hosted by GoDaddy. “Therefore, it is possible to pressure web hosting companies or search engines to effectively cut off access to crypto-based fundraising platforms,” she said.
When asked if decentralized fundraising is generally a good thing or a bad thing, Pimentel replied that it really depends on “if we agree with the ideology of the social movement in question.” Many might agree to support a group or foundation promoting democracy in the face of an authoritarian government. “I think we can all agree that these people 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 hatred, “We hope the government will intervene,” she told Cointelegraph, adding:
“I fear 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 just tools – whether they are used for good or evil really depends on the people using them. The same can be said about anonymity, Marta Belcher, a cryptocurrency and civil liberties lawyer, told Cointelegraph, further explaining:
“The fact that a technology can be used anonymously does not mean that there is something wrong with that technology. Nor should we call for a particular technology to be banned just because it might be used in a way we don’t like.
“We don’t blame Ford when one of their cars is used as an escape vehicle in a bank robbery,” Belcher added.
Governments may, however, require a minimum of oversight or regulation. Just recently, the Canadian government announced an extension of its Anti-Money Laundering and Anti-Terrorist Financing Act to include crowdfunding platforms and payment service providers, Pimentel continued, and “Deputy Prime Minister clarified that crypto transactions would be included in this measure.”
By law, crowdfunding platforms and related payment service providers, including crypto-based ones, must register with the Financial Transactions and Reports Analysis Center of Canada. “This means that these platforms will have to report crypto transactions over C$10,000 or crypto transactions labeled as suspicious,” Pimentel said.
The law applies to Canadian companies and international companies doing business in Canada. This raises the question of whether this will simply discourage companies from doing business in Canada.
After all, it can be expensive to have all the processes in place to comply with the law. Pimentel fears this could have the unintended consequence of imposing significant compliance expenses on Canadian companies, while “pushing people who want to circumvent reporting requirements to simply use overseas companies.”
—Lisa Bennatan (@LisaBennatan) February 16, 2022
A flashback ?
Overall, given that Bitcoin and other cryptocurrencies are borderless and relatively censorship-resistant, is there a way to reverse this trend? Will most social movements end up raising funds globally and through blockchain-based crowdfunding platforms? Pepper said:
“I think in the future, the use of decentralized forms of finance that are difficult for governments to interfere with will become the norm.”
And this process is likely to continue to spark controversy because it is always difficult to separate the means, for example Bitcoin (BTC), from the ends, such as vaccination mandates. Furthermore, arguments about the correctness 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.