‘They’re Opportunistic and Adaptive’: How Hamas Is Using Cryptocurrency to Raise Funds

Hamas, a militant group operating in the Middle East, has long relied on generous financial support from Iran to carry out acts of terrorism. Iran’s substantial financial backing has been crucial to Hamas’s operations. However, recent investigations conducted by authorities in the United States and worldwide have revealed that Hamas has found another revenue source – online cryptocurrency donations from distant supporters.

Also Read: Israel-Hamas Conflict: TikTok Steps Up Efforts to Combat Misinformation and Hate

Investigation by the U.S. Justice Department

Even before Hamas launched a surprise attack on Israel, the United States Department of Justice had initiated a criminal investigation into Hamas’s use of cryptocurrency through alleged money launderers. While many details of this money laundering case remain sealed, public court filings suggest that it is linked to cryptocurrency accounts associated with Hamas that the U.S. government had seized three years ago. The case is described as “Ongoing”, and proceedings in a related civil matter have been temporarily halted to avoid interference with the criminal investigation.

Israeli authorities have also seized cryptocurrency addresses allegedly linked to Hamas and other Palestinian militant groups. Private analysts consulted by CNN estimate that the collective value of these seized cryptocurrency holdings is in the tens of millions of dollars.

Hamas’s Use of Digital Currency

Hamas’s use of digital currency represents one of the various methods employed by the group, designated as a terrorist organisation by the United States and the European Union, to raise funds while circumventing international sanctions. As experts note, terrorist organisations are opportunistic and adaptive, making it challenging for authorities to counter their financing methods.

Hamas and other terrorist groups have publicly solicited cryptocurrency donations via social media platforms such as Facebook and X (Formerly known as Twitter). They have posted their crypto wallet addresses and instructions for donating. For instance, a United States Department of Homeland Security report highlights how a New Jersey man was charged in 2019 for posting on Instagram that he had donated to Hamas. He later pleaded guilty to concealing his attempts to provide material support to the group.

Also Read: X’s Struggle in Tackling Misinformation Amid Israel Conflict

Efforts to Halt Cryptocurrency Fundraising

Governments have attempted to police cryptocurrency transactions tied to terrorist organisations. In response, Hamas’s military wing, al-Qassam Brigades, announced in April its decision to stop fundraising in bitcoin to protect its donors. However, recent actions by Israeli authorities suggest that Hamas has not entirely abandoned cryptocurrency fundraising.

Apart from Bitcoin, the cryptocurrency wallets seized by Israeli authorities allegedly linked to Hamas have included Ether, XRP, Tether, and others. While it remains unclear exactly how much cryptocurrency Hamas has received, evidence indicates substantial amounts. According to crypto analytics software BitOK’s CEO Dmitry Machikhin, cryptocurrency addresses associated with Hamas received nearly $41 million between 2020 and 2023. Another $94 million was allegedly held by the Palestinian Islamic Jihad, a militant partner of Hamas.

Hamas’s use of cryptocurrency has been challenging to track due to its reliance on “One-time-use” crypto addresses generated for individual donors and illicit money exchanges that anonymously convert cryptocurrency to cash without leaving records.

Iran’s Role as a Major Benefactor

Iran plays a significant role in supporting Hamas, providing up to $100 million annually to Palestinian terrorist groups. The U.S. State Department’s 2021 report outlines how Hamas has raised funds not only in Iran but also in other Gulf Arab countries and through its charity organisations. The U.S. Treasury Department has revealed instances of Iran’s funds being transferred to Hamas through intermediaries based in Turkey and Lebanon.

Iran has used various tactics to fund terrorist groups, including shell companies, transactions involving senior officials, and using precious metals to evade sanctions. In 2018, the U.S. Treasury sanctioned nine targets involved in a network through which Iran used Russian companies to provide oil to Syria in exchange for funding sent to Iran’s Islamic Revolutionary Guard Corps, which was then transferred to Hamas and Hezbollah.

Iran has both commended Hamas’s actions in Israel and denied direct involvement in planning or directing the attacks. A Congressional Research Service report states that Hamas also raises funds through informal taxes and smuggling.

Government Investigations

Government investigators aren’t the only ones tracking Hamas’s finances. Attorney Asher Perlin, who represents the family of Yitzchak Weinstock, a 19-year-old American murdered by Hamas terrorists outside Jerusalem in 1993, has also kept tabs on the group’s assets. The Weinstock family obtained a legal judgment of nearly $80 million against Hamas in 2019 but had few conceivable paths to collect on that sum.

That changed in Perlin’s mind after the U.S. Justice Department announced what officials described in 2020 as an unprecedented crackdown on three groups that relied on “Cryptocurrency and social media to garner attention and raise funds for their terror campaigns”. Among them was Hamas’s al-Qassam Brigades. Investigators were able to seize 150 cryptocurrency accounts “That laundered funds to and from” Hamas accounts, according to a DOJ news release.

Challenges in Collecting Legal Judgments

With court approval, law enforcement officials secretly took control of Hamas fundraising websites, and donors who thought they were contributing to the terrorist organisation were making deposits in Bitcoin wallets controlled by the U.S. government.

Despite filing a claim two years ago, Perlin said the case has been repeatedly delayed as government lawyers have asked the judge for more time to allow a related criminal investigation to proceed. In May, the judge noted that the criminal investigation was for “Alleged money laundering” for Hamas and issued a six-month stay on proceedings in the forfeiture case. That stay is set to expire next month.

In a telephone interview from Israel, Perlin expressed frustration that the Justice Department has indicated that it will oppose allocating any forfeited assets to his clients.

Also Read: First AI War in 2023 Proves Christopher Nolan’s Fear

Conclusion

Hamas’s exploitation of cryptocurrency for fundraising underscores the constant challenge of adapting and countering terrorist financing methods. As authorities continue to investigate and seize assets, the issue of cryptocurrency donations to terrorist organisations remains a complex and evolving concern.

Frequently Asked Questions

How Does Iran Financially Support Hamas and Its Activities?

Iran has been a significant financial backer of Hamas, providing crucial resources to the militant group. The U.S. State Department reported that Iran has given up to $100 million annually to Palestinian terrorist groups, including Hamas. While Iran has commended Hamas’s actions, it has denied direct involvement in planning or directing their attacks.

How Does Hamas Use Cryptocurrency for Fundraising, and What Countermeasures Have Been Taken?

Hamas has leveraged cryptocurrency for fundraising, primarily by exploiting online donors offering support in cryptocurrency. They have used various cryptocurrencies, including Bitcoin, Ether, XRP, and Tether. Government agencies have initiated investigations to counter this, seizing cryptocurrency accounts tied to Hamas and other Palestinian militant groups. The U.S. Justice Department has been pursuing a criminal case against alleged money launderers associated with Hamas-linked cryptocurrency accounts.

What Are the Challenges in Tracking Hamas’s Cryptocurrency Activities?

Tracking Hamas’s cryptocurrency activities has been complicated by using “One-time-use” crypto addresses and illicit money exchanges that convert cryptocurrency into cash without leaving records. This dynamic nature of fundraising makes it challenging to monitor effectively. Legal judgments and asset forfeiture cases against Hamas have faced delays as government lawyers have requested more time to allow related criminal investigations to proceed. In one case, the Weinstock family sought to collect a nearly $80 million legal judgment against Hamas but faced obstacles.