How did Hamas, seemingly cut off from the global financial system as a designated terrorist organization, get the funds to carry out such a deadly and seemingly sophisticated surprise attack against Israel? The Financial Times reported that cryptocurrency played a significant role, with over 100 suspicious Binance exchange accounts now frozen and under investigation, but cryptocurrency makes up only a small piece of a much larger terror financing puzzle.
TRM Labs, the blockchain intelligence company where I work, has identified a number of fundraising efforts since the war began.For example, Gaza-based group GazaNow, which is actively supporting Hamas, is soliciting donations in cryptocurrency.Addresses used by Gaza Now have seen a total incoming and outgoing volume of about $6,000 following the attacks and about $6 million overall.Notably between August 2021 and July 2022, a Gaza Now address received $12,000 from terror group Palestine Islamic Jihad, a Hamas supporter.The address, which was first active in August 2021, has received nearly $800,000 in total and less than $5,000 worth of crypto since the attacks.However, these numbers pale in comparison to fiat fundraising conduits.
Hamas and other terrorist organizations rely, in large part, on aid from the international community.Iran provides an estimated $100 million annually (in fiat), according to the U.S.Department of State , with countries such as Qatar and Turkey also providing funding.
European countries, the United States, and even Israel have provided significant humanitarian assistance to Gaza over the years that has likely gone to fund Hamas’ malign activity.In addition to nation state support, Hamas has a global network of charities, plus private donors, and, according to Euronews reports , the terror org collects up to $15 million from the annual taxes it imposes on goods coming from Egypt, in addition to import taxes on products from the West Bank.
The flow of funds to Hamas in cryptocurrencies are the most visible and easiest to track, block and seize.Because of the native qualities of public blockchains – traceable, transparent, immutable – Israeli and U.S.authorities have had success tracing, tracking and seizing funds destined for Hamas.
One likely reason for the low donation volume to Gaza Now and other Hamas supporters is that Israeli authorities are targeting addresses associated with the fundraising campaigns.Some fundraising efforts have publicly said that they are no longer accepting donations (at least publicly) because their accounts are being targeted.On October 9, after the recent terrorist attack, GazaNow announced that they were suspending their public fundraising efforts, directing supporters to reach out through personal messaging.
An admin of the campaign would then provide a link to a fundraising campaign on Instagram.Within minutes that campaign was suspended as well.
MORE FOR YOU Trump’s SPAC Now Says Its 2021 Financial Statements ‘Should No Longer Be Relied Upon’ BlackRock And JPMorgan Are Quietly Are Quietly Laying The Groundwork For The Next Bitcoin Ethereum XRP And Crypto Price Bull Run Crypto Market Insights: South East Asia Pushes Forward With Crypto Fundraising Efforts Since War Broke Out In addition, the cyber branch of the Israel Police’s Lahav 433 announced the seizure of cryptocurrency accounts belonging to Hamas on Oct.
10.According to the Israeli Police, Hamas had been using accounts to raise money on social media since the attacks on Oct.7.Lahav 433 is working with the Defense Ministry, Shin Bet, and other intelligence agencies in the effort to shut down cryptocurrency channels that terrorist groups are using.
Then, on Monday, the stablecoin issuer Tether USDT said it had frozen funds in 32 cryptocurrency addresses linked to terrorism in Israel and Ukraine, and that it was working with Israel’s National Bureau for Counter Terror Financing.
According to a recent TRM Labs report , USDT on the TRON TRX blockchain is the preferred method of terrorist financiers.
Hamas: One Of The First Terrorist Organizations To Use Crypto Since at least early 2019, the Izz-Al Din-Al Qassam Brigades, Hamas’ military arm, has attempted to use cryptocurrencies as an alternative fundraising method to support its military operations.Hamas initially tested cryptocurrency fundraising by soliciting Bitcoin BTC donations on its Telegram channel before shifting to direct fundraising on its website, alqassam.net .
In August 2020, the U.S.Department of Justice announced the global disruption of three terror financing campaigns including the seizure of cryptocurrency accounts associated with al-Qassam Brigades.According to the DOJ release, the “three terror finance campaigns all relied on sophisticated cyber-tools, including the solicitation of cryptocurrency donations from around the world.”
In the first case, the al-Qassam Brigades posted a call on its social media page for bitcoin donations to fund its campaign of terror, then moved the request to its official websites.
Working together, IRS-CI, HSI, and FBI agents tracked and seized 150 cryptocurrency accounts that laundered funds to and from the al-Qassam Brigades’ accounts.
With judicial authorization, law enforcement seized the infrastructure of the al-Qassam Brigades websites and subsequently covertly operated alqassam.net .During that covert operation, funds from persons seeking to provide material support to the terrorist organization were routed to wallets controlled by U.S.law enforcement.
U.S.And Israeli Authorities Target Hamas’ Use Of Cryptocurrency Over the last few years, Israel’s NBCTF has repeatedly targeted Hamas’ use of cryptocurrency, seizing dozens of cryptocurrency addresses with tens of millions of dollars in volume, controlled by entities affiliated with Hamas.These include Gaza-based businesses such as Dubai Co.For Exchange, al-Muhtadon, al-Mutahadun For Exchange and al-Wefaq Co for Exchange.The overwhelming majority of the funds seized have been Tether on the Tron network.
The NBCTF released a copy of an administrative seizure in July 2021 for bitcoin, dogecoin, TRON, and other cryptocurrency addresses controlled by agents of Hamas.
The NBCF seizure revealed the growing sophistication of terrorist financing campaigns, which are now using multiple chains and currencies to evade sanctions and detection by law enforcement.A senior Hamas official reported to the Wall Street Journal in 2021 that its fundraising strategies continue to evolve as more restrictions are being placed on it.This evolution will likely involve a continued shift to multi-asset donations and increasingly sophisticated laundering methods.
Al-Qassam Brigades announced in April that it would stop receiving donations in bitcoin “out of concern about the safety of donors and to spare them any harm,” adding that it had seen an “intensification of hostile efforts against anyone who tries to support the resistance through this currency.”
While Israel executes a kinetic response, hunts terrorist leaders, and plans the rescue of hostages, it is clear that the focus is also on reducing crypto fundraising among terrorist organizations.As the digital world rapidly evolves, we are likely to see more attempts by terrorist financiers to take advantage of the promise of blockchains to move funds at unprecedented speed and scale.
But, we will also see authorities in the U.S., Israel and around the world leverage blockchain technology to stop them.
Ari Redbord.
