Israel is one of only nine nuclear-armed states in the world and boasts one of the world’s most advanced and interconnected air defense systems. Israel’s Iron Dome has been largely successful in repelling air attacks from Hamas over the years.
But on October 7, Hamas, the Islamic extremist group and de facto governing authority in the Gaza Strip classified as a terrorist organization by the European Union, the United States, Germany and other governments, launched more than 2,000 rockets into Israel. They fired bullets and succeeded in overwhelming these defenses. From within the Gaza Strip.
How did Hamas gather the resources for such a sophisticated attack against one of the world’s best-prepared militaries? According to analysts, cryptocurrencies played a key role.
Millions in crypto funding
As a designated terrorist organization, Hamas faces sanctions and exclusion from the international banking system. Global counter-terrorism financing measures track any fundraising attempts by this group. Still, according to the report, Hamas received large sums of money in the form of cryptocurrencies in the years leading up to the terrorist organization’s recent brutal attacks on Israel.
According to BitOK, a Tel Aviv-based cryptocurrency analysis and software company, Hamas received $41 million (39 million euros) between August 2021 and June 2023. The Palestinian Islamic Jihad (PIJ), whose militants joined Hamas in carrying out the attack, received an additional $93 million in cryptocurrencies, according to London-based cryptocurrency researcher Elliptic.
According to Elliptic’s analysis, Hamas’ military wing, Al-Qassam Brigades, has also received millions of dollars in crypto transfers. These transfers were in the form of Bitcoin, the stablecoin Tether, and other cryptoassets including Dogecoin, a cryptocurrency popular with Elon Musk that was first invented as a joke.
According to Elliptic, some of these groups are involved in crypto mining, which allows them to earn more revenue from the basic upkeep of crypto networks.
Cryptocurrency allows donors to avoid sanctions
Under Hamas rule, Gaza experienced severe economic isolation from many countries. A blockade with neighboring Israel and Egypt has restricted the movement of goods and people.
Even with these restrictions, U.S. magazines forbes In 2014, Hamas was named one of the world’s richest terrorist organizations, with annual revenues estimated at $1 billion. This was financed by taxes and fees, financial aid and donations. Much of Hamas’s funding comes from expatriates and private donors in the Gulf region.
Iran is considered one of Hamas’ most prominent financial backers. According to the U.S. State Department, Middle Eastern powers provide Hamas and other Palestinian terrorist organizations with about $100 million a year in funding. Qatar and Turkey also support Hamas financially.
Cryptocurrencies have made it easier for Hamas supporters in regions hostile to Hamas to evade sanctions. Already in 2019, Al Qassam Brigades called on its social media channel Telegram to send Bitcoin to its supporters.
“The reality of jihad is a waste of effort and energy, and the basis of war is money,” Hamas wrote in the post, attaching a wallet address from which it received about $30,000 in Bitcoin that year.
Payment due to pressure from authorities
However, in April 2023, the organization announced that it would stop raising funds in Bitcoin. This is due to “redoubling of hostile efforts against all those who seek to support the resistance through this currency,” they said on Telegram.
Although cryptocurrencies are still far from being the largest source of funding for terrorism, attention is being focused on cutting off channels to Hamas.
After the October 7th attack, Israeli authorities announced that they had frozen several Hamas-related cryptocurrency accounts, accusing Hamas of organizing new fundraisers on social media.
A police statement said: “The Police Cyber Unit and the Ministry of Defense, with the cooperation of the cryptocurrency exchange Binance, immediately took steps to identify and freeze these accounts in order to redirect the funds to the national treasury.” .
Binance is the world’s largest cryptocurrency exchange. While cooperating with Israeli authorities, the exchange itself has come under intense scrutiny for playing an indirect but significant role in terrorist financing. In recent years, authorities have attempted to seize cryptocurrencies held in dozens of Hamas-linked Binance accounts, according to a report. wall street journal. The US Department of Justice is also investigating virtual currency exchanges for failing to prevent money laundering.
Binance investigation uncovers criminal activity
Internal Binance communications revealed in court proceedings show that while the company may not be seeking out criminal customers, it is aware of and condones this customer base.
In one internal communication, former compliance officer Samuel Lim wrote that terrorists usually transfer small amounts because large amounts amount to money laundering.
“You can’t buy an AK47” [assault rifle] Binance did not respond to DW’s request for comment.
The United Nations estimates that cryptocurrencies account for 20% of global terrorist financing. The recent seizure of Hamas accounts has renewed scrutiny of cryptocurrencies. Critics argue that cryptocurrencies are the perfect financing tool for criminals because payments are difficult to trace and can potentially circumvent financial regulations.
“The fact that a Hamas-linked digital wallet received millions of dollars in virtual currency is concerning and should serve as a wake-up call to lawmakers and regulators,” said U.S. Senator Elizabeth Warren. I wrote this on X (former Twitter). “Cryptocurrency is a not-so-secret financial weapon that funds terrorist organizations such as Hamas, China’s fentanyl network, and North Korea’s missile program.”
Editor: Uwe Hessler
