The alleged recipient of the funds, Mohamed Elshinawy, pretended to sell computer printers on eBay in order to disguise PayPal payments he received from ISIS members overseas, according to a recently unsealed affidavit filed in a federal court in Baltimore.
The man reportedly told investigators he used a scheme dubbed "drop-shipping", that made it appear as if goods were bought and shipped to individuals linked to the terrorist organization, as a way of disguising the movement of money.
Federal Bureau of Investigation has reportedly unmasked a global financial network, which was used by a senior Isis operative to fund terror activities in the United States - under the cover of bogus eBay purchases.
The U.S. and other countries for years since 9/11 have focused on the formal global banking systems that terror networks might use to transfer money to would-be terrorists.
The Journal reports that Elshinawy told investigators he was told to use the funds for "operational purposes" within the USA, which could include terror attacks.
A senior IS member in Syria, Siful Sujan, who was killed in a drone strike in 2015, was instrumental in the development of this network.
The case suggests how Islamic State is trying to exploit holes in the vast online financial world to finance terror outside its borders.
A spokesman for eBay said that the company has "zero tolerance" for crime on its platform and is now cooperating with law enforcement on the case.
PayPal told the WSJ that the holding "invests significant resources" into reporting suspicious activity.