Cryptocurrency13.01.2025

Bad news for South African arrested over R11,500 Bitcoin transfer

The state prosecutor has said that it has an airtight case against Ziyadh Hoorzook, a 35-year-old South African man who was arrested in January on terrorist financing charges.

Hoorzook appeared in the Lichtenburg Magistrates Court on Friday to argue why he should be granted bail.

After hearing preliminary arguments from the accused and the investigating officer, the case was postponed until Wednesday, 15 January 2025.

The Crimes Against the State team of the Hawks Serious Organised Crime Investigation arrested Hoorzook on 3 January 2025 for a R11,500 Bitcoin transfer that he performed through Luno on 30 November 2017.

He has been charged with contravening the Protection of Constitutional Democracy Against Terrorist and Related Activities Act (POCDATARA).

According to the Hawks, he transferred the cryptocurrency to an organization that allegedly has terrorist ties.

In an affidavit read on Friday by his lawyer, Mohammed Razak, he named the organization he donated to as al-Sadaqah.

In September 2018, the U.S. House Committee on Finances heard that al-Sadaqah began soliciting donations in late 2017 to fund Islamic State fighters in Syria.

Yaya Fanusie, speaking in his capacity as Director of Analysis for the Center on Sanctions and Illicit Finance (CSIF) at the time, explained to the committee that “sadaqah” is an Arabic word for charitable giving.

“We monitored al-Sadaqah’s social media channels and analyzed their bitcoin address, which it would highlight regularly asking followers to donate anonymously with bitcoin,” Fanusie stated.

“In its initial campaign, it sought $750 for camp reinforcements. Within weeks, we noticed the address received $685 worth of bitcoin.”

Fanusie said the group continued requesting funding for logistical supplies, but only received a handful of bitcoin transactions, none of them as large as the $685 early in the campaign.

This amount is noteworthy, as $685 was worth about R9,350 on 30 November.

Assuming Hoorzook donated to the same organization CSIF was monitoring, his donation may have been the single largest amount sent to al-Sadaqah’s Bitcoin address.

The R2,150 discrepancy between the R11,500 that Hoorzook transferred from his bank account and the dollar amount reported by CSIF could be explained by South Africa’s bitcoin arbitrage gap.

Bitcoin is generally more expensive when bought in rands from South African exchanges than when looking at the dollar price on international exchanges at the same time.

However, bitcoin is also extremely volatile and the difference could be attributed to which bitcoin-dollar exchange rate the CSIF was using.

For example, cryptocurrency exchange Bitfinex reported that bitcoin traded between $8,821 and $10,542 on 30 November 2017.

The Bitcoin price on 30 November 2017

Hoorzook argued that he had no idea about al-Sadaqah’s terrorist ties. He said the transaction was an innocent donation to what he believed was a charity organization.

In the affidavit read in court on Friday, he said he recalled several drives to support the people of Syria at the time, as they were subjected to human rights violations.

He said he vaguely recalled an Islamic figure indicating that al-Sadaqah was the most appropriate organization to donate to because it was directly receiving and dispersing aid amid the conflict.

Hoorzook told the court that he intended to plead not guilty and that the case against him had been exaggerated.

“The state has misaligned me to a narrative which is factually untrue,” he said.

However, the Hawks investigating officer, Warrant Officer John Sithole, reportedly said the state’s case was watertight. This could lead to Hoorzook attempting to evade trial if he is granted bail, he warned.

Sithole told the court that he discovered a substantial volume of evidence suggesting that Hoorzook knew his funds would aid a terrorist organization to commit further terror-related activities in Syria, News24 reported.

He said the Hawks found videos, images, and articles containing extremist material that promoted violence on the accused’s electronic devices, as well as speeches by former al-Qaeda leader Osama bin Laden.

Sithole testified that material found by their forensic laboratory on Hoorzook’s devices included three al-Sadaqah advertisements that showed he had knowledge of the group’s activities.

He said the adverts clearly show that al-Sadaqah is not a charity organization and that Hoorzook knew the funds would be used for terror activities.

In a statement about the arrest, Hawks boss Godfrey Lebeya reaffirmed the law enforcement agency’s commitment to combating money laundering and terror financing in alignment with Financial Action Task Force (FATF) standards.

“Our dedicated team, in collaboration with local and international partners, are working as a collective to halt the illicit flow of funds that fuel organized crime and terrorism.”

The FATF greylisted South Africa on 24 February 2023 for falling short on its eleven measures of a country’s effectiveness in combating money laundering and the financing of terrorism.

It highlighted 22 specific shortcomings and BusinessTech recently reported that South Africa has now largely or fully addressed 16 of these.

In hopes of addressing outstanding deficiencies, National Treasury published the draft General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill for public comment towards the end of last year.

Among the changes being proposed are raising penalties and expanding regulatory oversight to better align with international standards.

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