Hamas Nets Millions in Crypto Donations Prompting Heightened Crackdown

A Tuesday October 10 publication by the Wall Street Journal (WSJ) disclosed that Hamas terrorist and affiliate organizations benefited from million-dollar crypto donations. The WSJ report echoes the findings by forensics firm Elliptic, echoed by Tel Aviv-based software firm BitOK. 

Palestinian Terrorists Realizes Hundreds Million in Crypto Donation

The WSJ publication acknowledges that though the amount is relatively small compared to the volume received from state-sponsored support, the affinity to crypto donations is increasing. In particular, the Tuesday report discloses that the Palestinian Islamic Jihad (PIJ) benefitted from $93 million while Hamas realized $41 million worth of crypto donations starting August 2021 to June 2023. 

The WSJ publication portrays crypto emerging as the preferred financing alternative to nations and groups sanctioned by the US-controlled financial system. The report acknowledges that the North Korean hackers led by the Lazarus Group have realized millions from hacking decentralized protocols and projects.

The Israeli Defense Minister Yoav Gallant informed the WSJ that most cryptocurrencies guarantee a privacy-preserving nature. The attribute makes tracking the funds’ flow difficult, causing anxiety among the regulatory agencies. 

Gallant observes that tracking and freezing the conduit for illicit financing to the groups. The observation echoes a CoinDesk report in June that a militant wing in Hamas Izz ad-Din al-Qassam Brigades benefitted with $100,000 funding in Bitcoin. Crypto donations surged in May 2023 as Israel and Hamas launched rocket attacks.  

Blockchain analytics on crypto transactions flowing to the Middle East places Binance at the center of the activity. WSJ reported that despite the increase in crypto utilization by Hamas and affiliates, including Lebanon-based Hezbollah and PIJ, it is hardly the primary source of inflow. The WSJ publication identified Iran as the largest funding source, with an estimated $100 million budget allocation annually. 

Blockchain intelligence firm TRM Labs reported that cryptocurrencies constitute a minor fundraising strategy for Hamas. The TRM Labs legal and governance executive Ari Redbord restated that state sponsorship is the primary source. As such, the Israeli authorities are teaming with Western allies to cut off the financing.

Israel Heightens War to Halt Crypto-Related Donations to Palestinian Terrorists

Israel is heightening its campaign to freeze crypto accounts utilized by Palestinian militant groups to solicit donations. The enforcement agency revealed in a Tuesday, October 10 statement that Hamas initiated a fundraiser campaign announced via social networks. The announcement urged crypto deposits to the Israeli authorities’ accounts linked to the war outbreak. 

The Police Cyber Unit, alongside the Defense Ministry, is devoted to locating and freezing the involved accounts assisted by the Binance crypto exchange. The action involved diverting the donations to the state treasury. However, the authorities were noncommittal on frozen accounts and the crypto value seized. 

Binance spokesperson reiterated that its surveillance team is working round the clock to support efforts combating terror financing. The executive added that the exchange is actively partnering with global law enforcement and regulators toward fighting illicit and terrorism financing. 

The Binance executive confirmed relying on data and transaction trails to track and pinpoint addresses and infrastructures linked to illicit financing. The spokesperson indicated they relied upon intelligence from law enforcement and investigative tools deployed in-house by the crypto exchange and its partners.

Hamas has in the past endorsed crypto fundraising methods. However, it revealed in April that it would halt receipt of funding via the crypto, citing increased hostility towards the donors. 

The stance by Hamas affirms the Reuters publication in May 2023 that Israel’s National Bureau for Counter Terror Financing (NBCTF). The report indicated that NBCTF had since 2021 seized over 190 accounts at Binance. Two frozen accounts were run by the Islamic State (ISIS), while other zones were linked to the Palestinian firms affiliated with Hamas.  

NBCTF seized funds linked to Gaza-based firms, including al-Wefaq Co for Exchange and Dubai Co. For Exchange, al-Mutahadun For Exchange and al-Muhtadon. The funds were in Tether’s stablecoin USDT, trailed on the Tron network.  

Hamas Turning to Sophisticated Laundering Methods

The seizure adds to the NBCTF achievements following the July 2021 freeze of Dogecoin, TRON, and Dogecoin linked with Hamas. The Israeli agency admitted that Hamas and affiliates were deploying sophisticated financing campaigns through multiple chains to evade detection and sanctions. 

Hamas senior officials indicated their fundraising strategies would evolve in response to restrictions imposed. The evolution would likely feature multi-asset donations and sophisticated laundering methods. 

TRM Labs in a Saturday October 7 publication illustrated that the seizures by the Israeli government prompted Gaza-based militants and Hamas to halt the publication of their crypto addresses. Instead, they lean towards payment processors embedded into the websites’ fundraising pages. 

Militant groups and Hamas are deploying sophisticated methods to match the digital world that is rapidly evolving. It implies that recent seizures by Israel’s NBCTF are possible through multi-stakeholder collaboration to complement law enforcement’s capability to track and trace. 

Blockchain intelligence firms such as TRM and crypto exchange input must support partners worldwide to halt crypto usage in funding terrorism acts.

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