Hamas, which is engaged in a conflict with Israel, may have been leveraging cryptocurrencies to fund its activities, according to various reports.
Earlier this month, Israel police reportedly froze several cryptocurrency accounts which they claimed were raising funds for Hamas. The move sheds light on the modus operandi of groups like Hamas.
According to the Reuters report cited above, several Hamas-associated groups have moved thousands of dollars through cryptocurrency since the conflict erupted.
Cryptocurrency’s Under-the-Radar Allure
Cryptocurrency’s appeal lies in its ability to facilitate quick and unregulated money transfers. Unlike traditional bank transactions, cryptocurrencies offer a level of anonymity that makes it challenging for authorities to trace the movement of funds. This under-the-radar appeal has made it a preferred choice for many, including those involved in illegal activities, also flagged by the United Nations
Hamas’ Adoption of Cryptocurrency
The journey down this path began when Hamas adopted the currency as a means of fundraising. The move to digital currencies is said to have begun in 2019, with the organisation soliciting donations via the Telegram messaging network and even on its official website. However, increased global surveillance on Bitcoin led Hamas to make the pivotal decision to stop accepting cash via the world’s largest digital currency.
The Role of Crypto Support Groups
To continue its funding efforts, Hamas shifted its focus to a network of support groups linked to cryptocurrency. These groups operate virtual crypto wallets that have been closely monitored since the conflict escalated. Surprisingly, recent data reveals a significant reduction in the movement of funds.
For example, one support group, Gaza Now, received less than $6,000 in its crypto wallet two weeks after the attacks, compared to a total of $800,000 since the wallet’s creation in August 2021.
A Multi-Faceted Funding Puzzle
While cryptocurrency appears to have played a key role in Hamas’funding strategy, it’s just a small piece of a much larger financial puzzle. The U.S. State Department estimates that Iran channels $100 million per year to Palestinian groups, including Hamas. Additionally, Hamas relies on a combination of taxing Palestinians, charitable contributions, and donations from a global diaspora, many of which are made in traditional currencies, not cryptocurrencies.
U.S. Warnings and Crackdowns
Amid these developments, the U.S. is taking a stern stance against cryptocurrency firms that may inadvertently or intentionally facilitate the misuse of the crypto ecosystem. Wally Adeyemo, the U.S. Deputy Treasury Secretary, has issued a stark warning to crypto firms. He emphasizes that the US will use all available tools to pursue individuals or platforms involved in enabling the movement of resources for terrorists.
The Need for Responsible Innovation
Adeyemo stresses that some in the digital asset space seek innovation without considering the potential consequences, instead of acting responsibly and safeguarding against illicit financing. This is particularly concerning when cryptocurrency exchanges are based in lightly or unregulated jurisdictions, as they may turn a blind eye to misuse of the system.
Recent Sanctions and Global Efforts
The Treasury Department has imposed sanctions on entities and individuals associated with Hamas, aiming to disrupt international financial support for the group. Additionally, Treasury officials have travelled to Qatar to seek cooperation in cracking down on financial channels supporting terrorist groups.
Recent reports suggest that Hamas, alongside Palestinian Islamic Jihad and Hezbollah, raised approximately $93 million in cryptocurrency before the attack in Israel. While some experts dispute the accuracy of this figure, the very possibility of terrorist organisations using it for funding highlights the need for stricter regulations on crypto trading.
Cryptocurrency’s Role in Global Conflicts
The intertwining of cryptocurrency and global conflicts, as seen in the ongoing struggle between Israel and Hamas, serves as a stark reminder of the evolving nature of warfare and illicit financing. Its’s potential for anonymity and speed can be harnessed for both good and nefarious purposes. As governments and organisations grapple with these challenges, it becomes increasingly clear that responsible innovation and regulation are essential to ensure that the benefits of the currency are not overshadowed by its dark side.
In a world where money moves at the speed of light, it is the responsibility of governments, financial institutions, and cryptocurrency firms to work together to safeguard against the misuse of this powerful technology. The fight against terrorist financing is now being waged in the world of digital currencies, and it’s a battle that requires constant vigilance and international cooperation to ensure a safer and more secure future for all.
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