Canadian website stops monetizing white supremacist content after fifth estate investigation

< warm>WARNING: The followers story contains maturate case affair, including racist and hateful imagery. 

Entropy allowed users to create and livestream videos or donate to their favourite streamers, but now, the website has stopped processing payments and the owners say they’re closing down.

“We are back to square one in terms of looking for stable financial infrastructure, and with that being the case we can’t in good conscience keep running the site,” co-founder Emmanuel Constantinidis said in a May 4 post to the website’s tech support forum.

“This was not the result we were hoping for, but we are grateful for how long we were able to keep the service going.”

Entropy advertised itself as a safe haven for influencers often blocked from posting and taking donations on mainstream platforms due to their content violating terms of service.

The fifth estate reviewed dozens of accounts and livestream comments and found the majority of active users promoted white supremacist or neo-Nazi beliefs — and accepted money from supporters.

Within two years of launching in 2019, Entropy processed more than $3 million in transactions.

Entropy was founded by the Alberta-registered tech firm Chthonic Software. The fifth estate also tracked its operations to Tbilisi, Georgia. 

An Entropy co-founder posted to the tech forum that since the fifth estate aired the documentary The Business of Bigotry? in March, the company’s financial operations had come under such intense banking scrutiny the company would stop processing donations and “prepare to shut the site down.” 

Jeff Tischauser, a senior research analyst for the American anti-hate advocacy organization the Southern Poverty Law Center, said mainstream platforms demonetize hate activists like "a game of whack-a-mole," but Entropy provided stability.

“Entropy was a major way that people in the neo-Nazi movement, the white nationalist movement, that's how they earned money,” said Tischauser.

“And now that Entropy is shutting down, they're scrambling.”

For instance, the fifth estate investigation identified the Goyim Defence League (GDL) as one of the groups that heavily relied on Entropy as a fundraising tool. GDL is known to livestream while harassing people online and in real life for being non-white or Jewish. Its livestreams often promoted a donation link hosted on Entropy.

Entropy was also used to raise funds by leaders of Second Sons Canada, a large white nationalist group.

Tischauser reviewed Constantinidis’s forum posts collected by the fifth estate and said they showed him “talking with some of the leading organized racists in the United States like they're buddies.”

Emmanuel Constantinidis declined an interview request, but said in an email: “We have always allowed a diversity of political thought on the platform, and our policy was to maintain total political neutrality in all professional communications to ensure everyone felt welcome and that they would not be discriminated against unfairly."

Constantinidis also said Entropy is “paying out our streamers what they are legally owed, as it is the only appropriate and honest thing to do.”

“It is completely untrue that our business model involved avoiding bank scrutiny. We were always transparent because everything we were doing was legal and above board.”

Since reporting that it is under scrutiny, Entropy has removed all payment and donation functions from its website.

One streamer affiliated with GDL posted “o/” — an online symbol representing a Nazi salute — before writing in all caps: “ENTROPY IS NO LONGER TAKING DONATIONS, GO TO THE OTHER OPTIONS INSTEAD :(.”

Another Entropy user, with the handle “Aryan Priest,” wrote: "I will make myself learn crypto donations to keep this alive.”

Decoding the hate speech used to get around social media bans

The convenience of using Entropy is one of the reasons it was widely used for so long, Tischauser said.

“What Entropy provided was access to more legitimate financial transactions: the ability to donate money using your debit card or your credit card,” he said.

“That's something that these hate streamers really need because it's a pain in the butt to try to access crypto markets.”

Entropy acted as an intermediary between the donor and receiver. It would collect funds from viewers, pool those contributions and then pay streamers in e-transfers. Entropy would keep a 15 per cent cut.

Sandro Kevkhishvili⁩, a financial analyst with Transparency International, a non-profit that promotes good governance, said operating across two countries added an extra layer of protection and provided access to a non-crypto, national currency.

“They were doing it under the radar,” he said.

“To me, it seems like their cover is blown.”

When asked by the fifth estate, Canadian and Georgian financial regulators would not confirm any specific action they had taken against accounts affiliated with Entropy or parent company Chthonic Software.

On April 10, he posted that “we tried to open accounts with several different banks/fintechs in Canada, however none of that worked out.”

Then on April 29, he wrote that “despite the hurdles and how slow everything is, we are pretty close to being able to drop our Canadian payment processor for one that is in Georgia as well, which will completely cut out the need for these large outgoing international transfers in the future.”

He detailed how an “account manager” suggested an "American intermediary."

But by May 4, he said the company would be shutting down.

He said that the company would continue to explore “other avenues for stable payment infrastructure, but if we come back, it will not be under either the Chthonic Software or Entropy label.”

Kevkhishvili⁩ reviewed the Entropy posts gathered by the fifth estate and said they lead him to believe Georgian authorities took action of some kind.

He said Georgia’s banking system would carefully watch media reports and requests for information.

Georgia’s banking system is well integrated with the West, so it is especially sensitive to clients who could cause “reputational damage,” he said.

“The banking [system] has apparently decided that they are a problem.”

Kevkhishvili said that integrated banking system may have drawn Entropy’s operators to Georgia, but that same system would likely carefully monitor the directors' corporate and personal financial transactions going forward.

“I suspect that their operation is crashed.”

In an April 29 post, Constantinidis said the company was trying to find a way to send a large amount of money still owed to streamers.

“I know some of you would like us to use alternatives, but the chances in Canada's regulatory system that we could move several hundred thousand dollars into cryptocurrency is zero,” Constantinidis wrote.

That “several hundred thousand" dollars would have come from “supporters of hate groups,” Tischauser said.

“That's an absurd amount of money for the purpose of what it's being collected for.”

By May 14, Constantinidis posted on the forum that “we have no company bank account any more.”

Instead, Entropy says it was “sending the money in small tranches to one of our personal accounts” before sending payments to streamers through PayPal or Bitcoin.

The Business of Bigotry?

Journalist

Rachel Ward is an investigative journalist and producer with The Fifth Estate. You can reach her with questions or story ideas at rachel.ward@cbc.ca.

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