Earlier this week, the Wall Street Journal published an article claiming that Palestinian militant groups, led by Hamas, were using cryptocurrencies to finance their terrorist operations against Israel.
The report based on an analysis by blockchain forensic firm Elliptic said that between August 2021 and June 2023, Hamas and its affiliates raised over $100 million in various cryptocurrencies. Meanwhile, Reuters reported that the terrorist group uses a “global finance maze” to funnel support from charities and friendly nations using crypto assets to bypass international sanctions.
Hamas Funnels Funding For Terrorist Activities In Crypto
Hamas, which also governs the Gaza City enclave, is estimated to have a yearly budget of over $300 million, which comes from taxes and in aid from Arab nations and various international charities. The U.S. State Department noted that the group also raises funds through its own charities in other Middle Eastern countries, and via donations from Palestinians and expatriates.
Since Hamas is sanctioned as a terrorist organization by the United States and Britain, it is not able to use regulated financial channels to receive funds. Instead, the group has reverted to using cryptocurrencies, credit cards, or contrived trade deals to circumvent mounting economic and financial restrictions.
Blockchain Technology The Achilles Heel For Hamas?
Tom Robinson, co-founder of Elliptic, says Hamas has been one of the more successful users of crypto for financing terrorist activities.
Until April 2023, the group had been accepting donations in Bitcoin (BTC) and was using crypto exchanges like Binance to launder the proceeds. However, they have been caught out multiple times and have had their wallets seized by authorities.
In a joint operation conducted in 2020, agents from the Department of Homeland Security (HSI), the Internal Revenue Service (IRS), and the Federal Bureau of Investigation (FBI) tracked and seized 150 Bitcoin wallets that were laundering funds to and from accounts linked to the al-Qassam Brigades – a military wing of Hamas.
Blockchain analytics firm TRM Labs said in a research note this week that from observing previous patterns, it is clear that crypto fundraising increases when the Hamas-Israel conflict begins. For instance, after a fight in May 2021, wallets controlled by Hamas received more than $400,000 in various crypto assets. Hamas is using cryptocurrency to finance the Hamas-Israel war .
However, donations via crypto are starting to dry up because Israeli authorities are targeting them immediately. This is because the terrorists mistook crypto for being a golden ticket for raising money secretly but it’s right the opposite. The distributed ledger technology (DLT) that powers blockchain is public and any transactions made through the network are recorded and remain immutable.
Between December 2021 and April 2023, Israeli authorities seized 189 cryptocurrency wallets that were said to be linked to Hamas. This led to the Palestinian militant group suspending all its Bitcoin donation campaigns due to concern that its crypto wallets were laying out breadcrumbs for intelligence agencies to track.
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Iran and Qatar Are Hamas’ Main Funding Source
However, crypto isn’t the only way Hamas and its allies are funded, and it’s not even their primary source of funding. According to the U.S. State Department, Iran and Qatar spend hundreds of millions of dollars annually to support Palestinian groups by moving cash through shell companies, shipping transactions, and precious metals.
Last year, it was reported that Hamas had established a secret network of shell companies in Turkey and Saudi Arabia that were managing an investment portfolio worth $500 million for the organization. The U.S. Treasury issued sanctions on the firms in May 2022.
Israel has long accused Tehran of instilling violence by supplying weapons to Hamas. Iran, which does not recognize Israel, says it gives “moral and financial” support to the militant group in the form of $100 million every year.
Meanwhile, Qatar also pays Gaza around the same amount of money. It is reported that the state provides aid of $100 each to the poorest Palestinian families and spends $30 million per month to help operate the enclave’s only power plant.
Interestingly, unlike Iran, Qatar’s funds reach Gaza via Israel. The cash is electronically transferred to Israel before Israeli and U.N. officials hand-carry the cash over the border to Gaza. The funds are distributed directly to families and public servants and the recipients are asked to sign a waiver declaring they have received the cash.
In recent years, Doha purchased fuel from Israel for Gaza’s power station and also sent Egyptian fuel that Hamas could sell to generate revenue. Israel Seizes Hamas Crypto Accounts With Help From Binance.
However, the growing concern is that the aid made for uplifting Palestinian society and developing its infrastructure is being used by its government for the wrong purpose. The latest conflict has seen over 2,000 Israelis and Palestinians killed and thousands more injured or displaced. Israel has since declared war on Hamas and there is fear the tensions may spread to other countries in the region, escalating the situation even further.
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