Recent investigations reveal that Hamas, along with other militant groups, obtained millions in cryptocurrency funding ahead of their attack on Israel.
Blockchain analytics and Israeli government seizure orders suggest that groups like Palestinian Islamic Jihad (PIJ) and Hezbollah amassed significant crypto funding. The Wall Street Journal found that from August 2021 to June 2023, PIJ-associated crypto wallets received around $93 million, as disclosed by crypto researcher Elliptic.
During a similar period, BitOK reported that wallets linked to Hamas received approximately $41 million in cryptocurrency. This recent attack by Hamas on Israel has sparked concerns about the country’s intelligence and cyber capabilities, given their inability to prevent the attack.
Although Hamas, PIJ, and Hezbollah are recognized as foreign terrorist organizations and are subject to sanctions, they have continued to procure weaponry and raise donations. It is unclear if cryptocurrency directly financed the attack. Cryptocurrency transactions allow immediate and anonymous transfers between digital wallets, making tracing and regulation challenging for authorities.
Various terrorist organizations, including Islamic State and al Qaeda, have exploited this tactic. Israeli authorities have acted by freezing Hamas’ cryptocurrency accounts used for soliciting donations on social media. Still, the exact amount of cryptocurrency seized remains undisclosed.
Hamas has actively sought cryptocurrency funds since 2019, primarily via its Telegram channel to request bitcoin donations. Over time, this group has used payment processors to generate cryptocurrency addresses and conceal the true source of their funds, creating complications for investigators tracking transactions.
Cryptocurrency, although just one of the fundraising methods used by these militant groups, poses unique challenges for authorities. Physical currency smuggling is riskier and more easily detectable, whereas cryptocurrency provides a discreet and efficient fund transferring means.
The U.S. Department of the Treasury issued a report in April highlighting that many decentralized finance (DeFi) services have failed to implement anti-money laundering and countering the financing of terrorism (AML/CFT) obligations. Some DeFi services do not fall under existing AML/CFT regulations, and some jurisdictions lack robust AML/CFT controls in the DeFi realm.
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