How cryptocurrency helped finance Hamas

2023-10-26 09:12:51, Ekonomi CNA

Israel is one of the nine global nuclear powers and boasts one of the most advanced and interconnected air defense systems in the world. Israel's "Iron Dome" has been quite successful for years in repelling Hamas airstrikes. But on October 7, Hamas - an Islamist militant group and de facto governing authority in the Gaza Strip that is classified as a terrorist organization by the EU, US, Germany and other governments - managed to bypass these systems, releasing over 2,000 rockets into Israel from inside the Gaza Strip. How did Hamas raise the funds for such a sophisticated attack against one of the world's best-prepared armies? According to analysts, a very important role was played by cryptocurrencies.

Multi-million financing with cryptocurrencies

Hamas has been declared a terrorist organization, and therefore faces sanctions and is excluded from the international banking system. But research shows that Hamas has received a significant amount of funds in the form of cryptocurrencies: $41 million (€39 million) between August 2021 and June 2023, according to Tel Aviv-based cryptoanalytical company BitOK. Palestinian Islamic Jihad (PIJ), whose militants joined Hamas in carrying out the attack, received additional cryptocurrency donations totaling around $93 million, according to cryptocurrency research institute Elliptic.

How cryptocurrency helped finance Hamas

The al-Qassam Brigades, the military wing of Hamas, have also received millions of dollars in cryptocurrency transfers, according to an Elliptic analysis. These transfers were made with bitcoins and other cryptocurrencies, including dogecoin, a cryptocurrency mined by Elon Musk that was originally invented as a joke. Some of these groups are also active in so-called cryptocurrency mining, Elliptic says, which allows them to make more money from maintaining cryptocurrency networks.

Hamas: "One of the richest terrorist groups in the world"

Although there were so many restrictions, the American magazine Forbes, in 2014, declared Hamas one of the richest terrorist groups in the world. In those years, the annual turnover of the organization was estimated at about 1 billion dollars. In May 2023, the US Department of Finance would estimate the annual turnover of the organization to be at least 500 million dollars. Most of Hamas' funding comes from expatriates or private donors from the Persian Gulf Region.

Iran is considered one of the most prominent financial backers of Hamas. According to the US State Department, the Middle Eastern power supplies Hamas and other Palestinian terrorist groups with about $100 million a year. Qatar and Turkey also financially support Hamas.??

How cryptocurrency helped finance Hamas

Cryptocurrencies have made it easier for Hamas supporters to circumvent sanctions. As of 2019, the al-Qassam Brigades are calling for support on their Telegram social media channels to send bitcoins. "The reality of jihad is effort and energy, but money is the backbone of war," Hamas wrote in a post, attaching a virtual wallet address, where about $30,000 in bitcoin was collected within a year.

In the focus of the Israeli authorities

However, in April 2023, the group said it would stop fundraising with bitcoin, due to a "doubling of the enemy's efforts against anyone who tries to support the resistance through this currency," Hamas wrote in a Telegram message . Cryptocurrencies are not Hamas' main source of funding, but there is an increasing focus on disrupting this channel to Hamas.

After the October 7, 2023 attack, Hamas again called for cryptocurrency donations, but Israeli authorities announced that they had frozen several cryptocurrency accounts linked to Hamas. The Cyber ??Unit of the Police and the Ministry of Defense immediately took measures to locate and freeze these accounts: with the help of Binance, they transferred the funds to the state treasury," a police statement said.

"Binance", on the "throne" of crypto / What is happening with the market of digital currencies
January 4, 13:12

Binance is the largest virtual cryptocurrency market in the world. He cooperates with the Israeli authorities, but is himself under scrutiny for the indirect but significant role he played in the financing of terrorism. In recent years, authorities have tried to seize cryptocurrencies held in dozens of Binance accounts linked to Hamas, the Wall Street Journal reported. Even the US Department of Justice is investigating the cryptocurrency market for failing to prevent money laundering.

Binance investigation highlights criminal activities

Internal communications at Binance revealed in court proceedings show that while Binance may not officially allow criminal customers, it is aware of and tolerates this customer base. In an internal exchange, former compliance chief Samuel Lim wrote that terrorists usually send small amounts, as large amounts are considered money laundering. "You can't buy an AK 47 [assault rifle] for $600," replies a colleague. Deutsche Welle (DW) asked Binance about this communication, but has not yet received a response.

The United Nations estimates that cryptocurrencies account for 20% of the world's terrorist financing. The recent seizure of Hamas accounts has re-opened the debate over the control of cryptocurrencies. Critics say cryptocurrencies are the perfect means of financing for criminals because payments can be difficult to trace and can evade financial regulations./ DW