Investigations have revealed that Hamas, along with groups like Palestinian Islamic Jihad (PIJ) and Hezbollah, received millions of dollars in cryptocurrency funding prior to the attack on Israel. Israeli government seizure orders and blockchain analytics were used in these investigations.
According to The Wall Street Journal, analysis by crypto researcher Elliptic showed that PIJ received up to $93 million in cryptocurrency between August 2021 and June 2023. Similarly, BitOK reported that Hamas received around $41 million in cryptocurrency during the same period.
The recent attack by Hamas has raised concerns about Israeli intelligence and cyber capabilities, as they failed to intercept a major attack on the country.
Hamas Fundraising in Crypto Despite Sanctions
Despite being designated as foreign terrorist organizations and facing sanctions, Hamas, PIJ, and Hezbollah have managed to raise funds and acquire weapons.
It is unclear whether cryptocurrency directly financed the attack.
Cryptocurrency transactions allow for instant and anonymous transfers, making it challenging for authorities to trace and regulate.
Terrorist organizations like Islamic State and al Qaeda have previously exploited this tactic.
The Israeli authorities have taken action to freeze cryptocurrency accounts used by Hamas to solicit donations on social media platforms. However, the specific amount seized has not been disclosed.
Challenges in Combating Terror Financing Through Crypto
Hamas has been actively seeking cryptocurrency funds since at least 2019, primarily through its Telegram channel. Over time, they have used payment processors to generate addresses and obscure the source of their funds, making it difficult for investigators.
Cryptocurrency is just one of the fundraising methods used by these groups, but it presents unique challenges for authorities. Unlike physical currency, cryptocurrency allows for discreet and efficient fund transfers.
In April, the U.S. Department of the Treasury highlighted the failure of many decentralized finance (DeFi) services to implement anti-money laundering and countering the financing of terrorism (AML/CFT) obligations.
Some DeFi services are not subject to existing AML/CFT regulations, and certain jurisdictions lack robust controls in this area.