Austin Campbell, founder and managing partner of Zero Knowledge Consulting, a firm specializing in data processing systems design, has offered his perspective on the ongoing debate about cryptocurrency and its potential use in financing terrorism. Campbell suggests that it is crucial for the government to clarify whether its objective is specifically to target funding for Hamas or to shut down all possible funding channels, a move which could potentially exacerbate the situation.
"Importantly, is our goal to interdict as much terrorism financing to Hamas as possible, or is our goal to shut down all of the platforms where we can easily detect terrorism financing, so we just don't see it, even if lots of it happens," said Campbell. "Legislation that would facilitate effective enforcement, monitoring, and interdiction of bad actors while preserving privacy for the majority of law-abiding folks is absolutely key. However, the latter option is likely to do a lot of collateral damage without improving anything (unless all avenues were easy to detect), as all you are doing there is forcing the activity out of the light. In short, we need to focus on actual security, not security theater."
In a post published on Substack on Jan. 28, Campbell expressed his belief that public blockchains could serve as an effective tool for identifying and halting terror financing. He presented a hypothetical scenario where an "otherwise law-abiding" American citizen intended to send a payment that would ultimately end up with Hamas. The citizen uses conventional financial systems to transfer money to a relative who then sends it to a business through either legitimate or blatantly illegitimate transactions. This business subsequently pays dividends to a Hamas member. According to Campbell, regardless of whether these transactions are cash-based or electronic, the involvement of multiple platforms and banking institutions creates an obfuscation layer that prevents external entities, including the original sender, from tracing the entire transaction chain.
Austin Campbell
| youtube.com/@GOPFinancialServices
Campbell critiqued the traditional financial system in his post stating: "This reveals the problem with the traditional financial system: it is fragmented, it is opaque, and it’s not particularly good at knowing what the other parts are doing." He added that most activities occur within isolated silos which remain obscure to outsiders who can only see one entry point among many. Conversely, if such transactions were conducted on a public blockchain, third parties would have visibility into the entire sequence. Moreover, if law enforcement agencies can identify a wallet associated with Hamas, mapping out its transaction ecosystem becomes straightforward.
Identifying specific wallets is "shockingly easy," says Campbell, especially considering know-your-customer (KYC) protocols required when converting fiat currency into crypto. He stated: "Suffice to say, we know a shocking number of wallets associated with Hamas, or sanctioned Iranians, or Russians, or North Korea, etc." By combining various listening operations with the aforementioned KYC data, almost all wallets can be found given enough effort. Campbell also noted that in many cases involving digital tokens, the token issuer can "freeze and seize" funds even without access to the private key of the wallet holding these funds.
In his post, Campbell suggested that if U.S. regulators and legislators fully understood blockchain technology, they would focus on attracting as many crypto companies as possible to the United States and friendly jurisdictions for them to fall under U.S. regulations. He also advocated for promoting widespread adoption of dollar-backed stablecoins due to their ease of access to "freeze and seize" capabilities. However, he stressed the importance of robust civil rights protections to prevent law-abiding citizens from having their assets frozen without due process. In his view, the current approach taken by the U.S. government is contrary to what is needed for effective intervention in terror financing.
Campbell established Zero Knowledge Consulting in February 2023 according to his LinkedIn profile. He currently holds positions as a partner at Lunaria Group and an adjunct professor at Columbia Business School. His past roles include serving as chief risk officer at Paxos and head of stable value products at Global Rates Trading.
