Title: Cryptocurrencies and the Funding of Hamas’ Sophisticated Attack on Israel
Israel, one of the world’s nine nuclear powers with a highly advanced air defense system, has been successful in repelling air attacks from Hamas for years. However, on October 7, 2023, Hamas managed to overwhelm Israel’s defenses and launched over 2,000 rockets into the country. Surprisingly, analysts have found that cryptocurrencies played a significant role in enabling Hamas to gather the resources for this sophisticated attack.
Cryptocurrency Funding for Hamas
As a designated terrorist entity, Hamas faces sanctions and exclusion from the international banking system. Nevertheless, reports indicate that Hamas received substantial funding in the form of cryptocurrencies leading up to its latest attack on Israel.
According to BitOK, a crypto analytics and software firm in Tel Aviv, Hamas received $41 million (€39 million) between August 2021 and June 2023. Additionally, the Palestinian Islamic Jihad (PIJ), in collaboration with Hamas, received another $93 million in cryptocurrencies, as reported by London-based crypto researcher Elliptic. The al-Qassam Brigades, the military wing of Hamas, also received significant amounts of cryptocurrency transfers, including bitcoin, tether, and even dogecoin, as analyzed by Elliptic.
Exploiting Sanctions Loopholes
Under Hamas rule, the Gaza Strip has faced severe economic isolation, with blockades by neighboring Israel and Egypt restricting the movement of goods and people. Despite these restrictions, Hamas has managed to become one of the wealthiest terrorist groups globally, estimated to have an annual turnover of up to $1 billion according to Forbes in 2014. This wealth primarily stems from taxes, fees, financial aid, and donations.
Cryptocurrencies have offered a way for Hamas supporters in hostile areas to circumvent sanctions. As early as 2019, the al-Qassam Brigades were soliciting bitcoin donations on their Telegram social media channel, receiving approximately $30,000 that year. However, in April 2023, Hamas announced it would cease its bitcoin fundraising due to increased scrutiny and hostile efforts against cryptocurrency financing. Nonetheless, cryptocurrencies remain a concern as a funding channel for terrorism.
Actions Taken to Curtail Cryptocurrency Funding
In response to Hamas’ attack on October 7, Israeli authorities froze several Hamas-linked cryptocurrency accounts and worked with the world’s largest cryptocurrency exchange, Binance, to divert the funds to the state treasury. Binance itself is under scrutiny for its involvement in financing terrorism and has faced attempts by authorities to seize Hamas-linked accounts.
The seizure of Hamas accounts and the increasing use of cryptocurrencies for terror financing have renewed calls for stricter regulations and monitoring of the crypto industry. Critics argue that cryptocurrencies provide an ideal tool for criminals due to the difficulties in tracking payments and evading financial regulations.
The sophisticated attack by Hamas on Israel highlighted the role of cryptocurrencies in enabling terrorist organizations to gather significant funds. Hamas and its affiliated groups successfully accumulated millions of dollars in cryptocurrencies, aiding in the procurement of resources for their attacks. The incident has drawn attention to the need for international cooperation in monitoring and regulating the use of cryptocurrencies to prevent their exploitation by terrorist groups.