In a startling revelation, the Wall Street Journal, with data sourced from forensics firm Elliptic and Tel Aviv software company BitOK, has exposed the significant inflow of cryptocurrency donations to the Hamas terrorist organization and its affiliated groups. This revelation has raised concerns about the potential use of cryptocurrency as a subterfuge financing method for entities cut off from the U.S.-controlled global financial system.
According to Elliptic, Palestinian Islamic Jihad, a group with close ties to Hamas, reportedly received an astounding $93 million in cryptocurrency donations between August 2021 and June 2023. During the same period, Hamas itself is said to have obtained approximately $41 million in crypto funds. These sizable sums have underscored the versatility of cryptocurrency as a means of financial support, especially for organizations that are otherwise restricted in traditional financial channels.
Cryptocurrency’s appeal as a fundraising method for groups and nations facing international financial restrictions is partly due to the privacy-preserving nature of many cryptocurrencies. These flows of funds can be challenging to track, a situation that has raised concerns among government agencies worldwide.
Israeli Defense Minister Yoav Gallant acknowledged the complexities involved in monitoring and combatting such illicit financial activities, saying, “This is not an easy task.”
This is not the first time that cryptocurrency donations to Hamas have come to light. In June, CoinDesk reported that the Izz ad-Din al-Qassam Brigades, Hamas’ militant wing, received up to $100,000 in bitcoin (BTC) since the beginning of 2021. Notably, there was a significant spike in donations during a period of heightened tensions, with Israel and Hamas exchanging rocket attacks. The report implicated Binance as a central platform for these transactions, based on data from three blockchain analytics firms and CoinDesk’s analysis.
However, it is essential to note that cryptocurrency donations are not the primary source of funding for Hamas and its affiliated groups, including Palestinian Islamic Jihad and Hezbollah, based in Lebanon. Iran remains the most significant funding source, providing approximately $100 million annually, according to the U.S. government.
Ari Redbord, the head of legal and government affairs at blockchain intelligence firm TRM Labs, offered a broader perspective on the role of cryptocurrency in these groups’ fundraising strategies. He stated, “Crypto is a very small part of Hamas’ fundraising strategy. It’s mostly state-sponsored. There’s a focus on it because you are trying to cut off financing by any means. But it’s a relatively small part of the picture.”
As cryptocurrencies continue to gain popularity and adoption, regulators and governments worldwide face an ongoing challenge in monitoring and addressing potential misuse of this financial technology, especially in cases involving groups and entities operating outside traditional financial systems.