Israel, Hamas and Crypto - facts and insights

Hey fellow Bulbers

For the last few weeks, I have been feeling bad regarding the current war between Hamas and Israel. There is too much hate, racism, and demands for revenge. I think that the critical solution would be to impose a cease-fire, provide aid and health care in Gaza, and establish a U.N. peacekeeping force, including a police and judiciary.

I have also been following the situation regarding cryptocurrencies and their usage by terrorist groups such as Hamas. One sure thing is that crypto is still a smaller part of the overall transfers to organized crime and terrorism, while most of the funding is still done in USD. 

Regarding the usage of cryptocurrency, here are some of the recent analyses and facts, including some of the recent publications by Chainalysis: 
 

• Israeli police said on Oct. 10 that it had frozen several crypto accounts that were used to solicit donations for Hamas. Some accounts, as on Binance, were owned by Palestinian firms connected to Hamas. Binance expressed "working closely with international counter-terrorism authorities" on the seizures.

• "Hamas has been one of the more successful crypto users for the financing of terrorism," according to Tom Robinson, co-founder of blockchain research firm Elliptic. Cryptocurrency's ledger system can make such transactions traceable. Blockchain researchers TRM Labs expressed that after fighting in May 2021, Hamas-controlled crypto addresses received more than $400,000, TRM Labs said.

• Hamas received $41 million between August 2021 and June 2023, according to crypto analytics and software firm BitOK, based in Tel Aviv. 

• The Palestinian Islamic Jihad (PIJ), whose militants joined Hamas in carrying out the attack, received another $93 million in cryptocurrencies, according to London-based crypto researcher Elliptic. 

• The al-Qassam Brigades, the military wing of Hamas, have also received millions of dollars of cryptocurrency transfers, according to an Elliptic analysis. These transfers came from BTC, the USDT, and other crypto-assets, including Dogecoin. 

• Matthew Levitt, a former U.S. official specializing in counter-terrorism, estimated the bulk of Hamas' budget of more than $300 million came from taxes on business, as well as from countries including Iran and Qatar or charities. 

• Chainalysis has been aware of Buy Cash and its role in terrorism financing for a few years. For instance, in our August 2020 blog post on a United States-led disruption of a terrorism financing ring, we referred to Buy Cash as a Gaza-based MSB and showed some of its on-chain activity. 

• Hamas often utilizes small-dollar cryptocurrency donations to fund its activities. In June 2021, Israel's National Bureau for Counter Terror Financing of Israel (NBCTF) seized cryptocurrency wallets linked to a Hamas fundraising campaign. As noted in 2021, one of these wallets belonged to Buy Cash. 

• There is a bipartisan (Democrats and Republicans) in the USA to impose a ban on the usage of cryptocurrencies for terrorist organizations such as Hamas. A letter sent on Tuesday to the U.S. Treasury Department and the White House from 105 lawmakers led by Senators Elizabeth Warren, Roger Marshall, and Representative Sean Casten expressed "grave concern" that Hamas and an affiliated group called Palestinian Islamic Jihad were using digital assets to fund their operations and evade U.S. sanctions. 

What do you think about the current situation? Is there a chance to use crypto to assist refugees? Are there new risks for political demands for banning crypto? 
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