LUCKNOW (CoinChapter.com) — Israel is one of the nine nuclear powers with highly advanced air defense systems. Israel’s “Iron Dome” has protected the country from air attacks. On Oct. 7, the Islamist militant group Hamas fired over 2,000 rockets into Israel from inside the Gaza Strip.
Hamas’s recent attack on Israel shocked the entire world and raised a key question: How was the entire operation financed? New reports reveal that terror groups received part of their cryptocurrency funding to finance the attack on Israel.
According to the Wall Street Journal (WSJ), three groups, namely Hamas, Palestinian Islamic Jihad (PIJ), and Hezbollah, have received significant cryptocurrency funding. The government has taken action to freeze cryptocurrency accounts for soliciting such donations.
Countries such as the US and the UK have listed these three groups, Hamas, the PIJ, and Hezbollah, as foreign terrorist organizations.
This resulted in Treasury Department sanctions restricting their access to the international banking system. That’s why these groups turned to unregulated cryptocurrencies to receive funding.
However, it remains uncertain whether they used the donated amount to finance Saturday’s assault.
Government Seized $41 Million So Far
The United States and Israel are escalating efforts to disrupt cryptocurrency transactions with Hamas. Bitcoin, Dogecoin, and Ethereum have been linked to funding Islamist organizations through cryptocurrencies.
Cryptocurrencies and exchange platforms have been scrutinized in response to Hamas’s October 7th attacks.
The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) proposed new regulations on Oct. 19. It classifies “Convertible Virtual Currency Mixing (CVC mixing) as a class of transactions of primary money laundering concern … to combat its use by malicious actors including Hamas [and] Palestinian Islamic Jihad”.
Additionally, crypto analytics and software firm BitOK report indicates that Hamas received $41 million through crypto donations between 2019 and 2023. According to British firm Elliptic, which analyzes virtual currency transactions, the Palestinian Islamic Jihad group raised $94 million in cryptocurrency over recent years.
On Oct. 18, Washington sanctioned “Buy Cash,” a Gaza-based company accused of facilitating cryptocurrency transfers to Hamas and the Palestinian Islamic Jihad.
Cryptocurrency Terror Funding Through Social Media
Co-founder of Elliptic, David Carlisle, writes in a blog post that “Hamas’s use of crypto first came to light in January 2019” when the al-Qassam Brigades, Hamas’s armed wing, organized a call for Bitcoin donations through social media platforms like Facebook and Instagram.
Initially, these “funding 2.0” efforts only received a few thousand dollars. However, Hamas has been using social networks to raise funds since then.
Cryptocurrencies are increasingly being accused of facilitating funding for extremist groups. However, Some experts like Tom Keatinge, director of the Centre for Financial Crime Research and Security Studies at the Royal United Service Institute, caution against overhyping their role.
Deutsche Welle reports that most of Hamas’ budget (nearly $1 billion) comes from ‘expatriates or private donors in the Gulf region.’
While the $41 million in seized cryptocurrencies is significant, it may still be a small fraction of Hamas’s funding.
Nonetheless, cryptocurrencies have gained prominence among terrorist groups as a funding method due to their ease and speedy transaction. With traditional terrorist financing channels facing crackdowns, these groups have turned to cryptocurrencies for raising funds.