In the modern battlegrounds of the Holy Land, Hamas has showcased its agility in leveraging cutting-edge technology to launch attacks on Israel. They utilize various means, ranging from rockets and drones to even futuristic paragliding, all executed with agility. However, one modern element that comes as an unexpected twist is the use of mobile phone cameras and internet connectivity to disseminate their criminal acts worldwide. Yet, one question still looms: where do they obtain the funds for all of this? One potential source is cryptocurrency donations to Hamas.
A significant portion of their funds comes from cryptocurrency. Decentralized financial systems have long been touted as a way to circumvent the complexities of the regulated global financial system, and cryptocurrency has been a favored choice for financing illicit activities. Nevertheless, its role as a supporter of terrorist groups has not always been at the forefront of the Web3 narrative.
Crypto Hamas and Global Efforts to Counter Cryptocurrency in Terrorism
In August 2020, the United States government successfully seized millions of dollars from terrorist groups that were raising funds through cryptocurrency. However, according to Elliptic, a company that assists crypto businesses in complying with financial regulations, Palestinian Islamic Jihad, a militant group involved in recent attacks on Israel, managed to raise funds worth $93 million between June 2021 and August 2023. Meanwhile, Hamas's own crypto holdings amounted to approximately $41 million in digital payments.
While the exact purposes of these funds remain unclear, in 2022, the U.S. government imposed sanctions on an investment office associated with Hamas, estimated to have $500 million in assets. These figures provide some context; the United Nations estimates that cryptocurrency contributes to around 20% of global terrorism financing.
How Terrorist Groups Use Cryptocurrency
Affiliates of Hamas, such as the Al-Qassam Brigades, their military wing, have openly solicited donations in Bitcoin at least since 2019. It is known that cryptocurrency donations to Hamas have reached hundreds of millions of dollars. However, these groups are involved in various types of cryptocurrencies, including Dogecoin - a cryptocurrency often promoted by Elon Musk - as well as stablecoins like Tether and USDC linked to the U.S. dollar.
In an August 2023 report, Elliptic even noted that wallets they monitored exhibited consistent behavior with terrorist groups investing in DeFi protocols and reaping profits using Solana, one of the popular cryptocurrencies supported by Sam Bankman-Fried of FTX. These organizations would struggle to access traditional financial assets from public markets but shrewdly leverage smart contracts that do not require customer identification.
Officials from Israel and the United States have sought cooperation from leading cryptocurrency exchanges, such as Binance, to cut off access for users associated with terrorist groups.
One key initiative in these efforts is the Financial Action Task Force (FATF), where regulators from around the world collaborate to develop standards and best practices for combating money laundering. However, there are still many countries on the FATF "gray list" that have not fully complied with these standards, including Jordan, Syria, and the United Arab Emirates.
Shlomit Wagman, the former head of the Israel Money Laundering and Terror Financing Prohibition Authority, emphasized the importance of cryptocurrency technology companies paying particular attention to the risks of crypto misuse, especially by Hamas. She warned that unless these risks are addressed properly, the crypto industry's progress could be hindered, and in extreme cases, cryptocurrencies could be banned entirely, as China has attempted.
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