Since Hamas’ brutal attack on Israel on October 7, the United States and Israel have stepped up efforts to restrict crypto transfers to Hamas. Bitcoin, Dogecoin, and Ethereum have come under increasing criticism as sources of funding for Islamist groups. is that so?
The role of digital currencies and crypto exchange platforms such as Bitcoin and Dogecoin in funding radical Islamist movements has come under increased scrutiny following Hamas’ unprecedented attack on Israeli territory on October 7th. has been done.
On October 19, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) propose new regulations Identifying “convertible virtual currency mixing” (CVC mixing) as a type of transaction of major money laundering concern and combating its use by malicious actors, including Hamas [and] Palestinian Islamic Jihad”.
These online services, more casually known as “mixers” or “tumblers,” mix cryptocurrencies of illicit origin with other cryptocurrency funds.As a result, a cryptocurrency industry news site acknowledges that “the risk of using virtual currency mixers for money laundering and concealment of profits is considerable.” cointelegraph.
Sue Bitcoin via Facebook, Instagram, and Telegram
Following the October 7 attack, the Israeli Ministry of Defense claimed to have seized virtual wallets linked to Hamas that had received $41 million (€39 million) between 2013 and 2019. The Palestinian Islamic Jihad organization raised $94. According to Oblonga British company that analyzes virtual currency transactions.
That’s not all. Washington also decided on October 18: Allow “cash purchases” The Gaza-based company is accused of “facilitating” cryptocurrency transfers to Hamas and the Palestinian Islamic Jihad.
“Hamas’ use of cryptocurrencies first came to light in January 2019,” wrote Elliptic co-founder David Carlyle. blog post Al-Qassam Brigades, an armed wing of Hamas, was caught red-handed while organizing a call for Bitcoin donations through Facebook and Instagram.
Initially, these “Funding 2.0” efforts raised only a few thousand dollars, but since then Hamas has increasingly used social networks as a means of raising funds. And the Palestinian group, officially listed as a terrorist organization by the EU and US, is not the only one doing so. Nicholas Ryder, a law professor at Cardiff University and an expert on terrorist financing networks, said: “The use of cryptocurrencies in conjunction with social media platforms such as Facebook, Instagram, and most recently Telegram is extremely difficult. “It’s become popular,” he says.
Recent attention to funds transferred to Hamas in Bitcoin and other cryptocurrencies suggests that without this windfall, the Islamist movement would be bankrupt, or at least have a much harder time financing attacks on Israel. It may give the impression that it would have been.
secondary means
“There’s a certain amount of hype surrounding this topic. It’s relatively new, well-known, and unknown to many people, so it naturally attracts attention. It can’t be ignored, but considering the pros and cons… [using it for] “Cryptocurrencies are not the best choice for raising or transferring funds,” said Tom Keatinge, director of the Center for Financial Crime and Security Research at the Royal United Services Institute, one of the UK’s leading security think tanks.
For example, Hamas reported by Forbes magazine. Ranked in 2014 It is “one of the world’s richest terrorist groups,” with an estimated annual budget of nearly $1 billion.Most of the funds come from “expatriates or individual donors in the Gulf region,” German news channel points out. Deutsche Welle.
In this regard, the $41 million in virtual currency seized by Israeli authorities may seem like a drop in the bucket for Hamas. Furthermore, these amounts need to be discounted. Separating funds intended to finance terrorist activities from other funds within a virtual wallet can be extremely difficult, US blockchain analysis firm Chainaries points out in a paper. blog post.
”[It’s] Although it is impossible to quantify the amount of money being transferred via cryptocurrencies, cryptocurrencies are becoming an increasingly important funding method,” Ryder says.
Keating points out that the rise of Bitcoin, Ethereum and Dogecoin in the world of terrorism can be explained above all by the ease of transactions. “It’s easy and you can donate from the comfort of your own couch.” It’s also much faster than opening a bank account and finding an intermediary to transfer your funds. “All you need is a smartphone or laptop,” he adds.
As international authorities also increase their focus on countering traditional terrorist financing routes, these groups are looking to supplement with new financing methods. “The more pressure we put on traditional financing methods, the more they will find alternatives like cryptocurrencies. And the better we will become at fighting traditional financing methods. It’s like a balloon, when you squeeze one part, the other part gets bigger,” Keating says.
Not so anonymous
Hamas, al-Qaeda, and Hezbollah also do not hesitate to combine the best of both worlds. For example, there may be a cryptocurrency dimension to the use of fake NGOs, a classic financing vehicle for terrorist groups. “They can take the top 10 to 15 percent and convert it into cryptocurrency and transfer it to make it more difficult to track,” Ryder explains.
However, the terrorist movement’s interest in these new financing methods is not as strong as current media noise suggests. Because they are ultimately not as anonymous as we are led to believe. “Cryptocurrency may seem like a secret way to move funds, but it has vulnerabilities. As soon as you start a blockchain transaction, your transaction becomes traceable.Cryptocurrency is not as secret as many people think,” says Keating.
In fact, all Bitcoin transactions pass through the blockchain. Blockchain is the digital equivalent of a ledger that everyone can access. Sure, you won’t see the names of those sending or receiving funds, but it’s possible to track every movement of funds, and companies like Chainaracy and Elliptic are masters of the art of tracking where funds come from. It becomes.
Of course, there are ways to make these transactions more anonymous, but this comes at the expense of ease and speed, which are the main benefits of using cryptocurrencies for terrorists and other criminals. After all, handing over a suitcase full of cash is easier and more anonymous.
This article is a translation of the French original.