The recent Hamas attack on Israeli territory left the world in shock, but it also prompted a critical question: How did the group finance this operation? The surprising answer lies in cryptocurrency. According to the Wall Street Journal (WSJ), citing Israeli government data and a blockchain analytics report, three groups – Hamas, Palestinian Islamic Jihad (PIJ), and Hezbollah – received substantial sums of money through cryptocurrency. To counter this, the government has frozen cryptocurrency accounts used for soliciting donations.
Crypto research firm Elliptic reported that PIJ received $93 million in cryptocurrency between August 2021 and June of this year, while another company, BitOK, claimed that wallets associated with Hamas received approximately $41 million during a similar period.
All three groups have yet to respond to these developments. The WSJ noted that the United States has designated Hamas, PIJ, and Hezbollah as foreign terrorist organizations, resulting in sanctions by the Treasury Department that limited their access to the international banking system. Consequently, they turned to unregulated cryptocurrency to receive funds.
However, it remains unclear whether the funds they received were directly used to finance the Saturday assault. The exact amount seized from the cryptocurrency wallets also remains uncertain.
Israeli police cited their motivation for freezing these crypto accounts as an attempt to halt the flow of money that Hamas raises through social media campaigns. According to a police statement, “With the outbreak of the war, Hamas’ terrorist organization initiated a fundraising campaign on social networks, urging the public to deposit cryptocurrencies into their accounts.” They also revealed that the Police Cyber Unit and Ministry of Defense, with the assistance of the Binance crypto exchange, swiftly took action to locate and freeze these accounts in order to divert the funds to the state treasury.
The statement did not provide further details regarding the number of accounts frozen or the value of cryptocurrency seized.
Cryptocurrency enables users to bypass traditional banks by facilitating instant transfers between digital wallets, typically held at cryptocurrency exchanges. For their transactions, Hamas and other groups primarily utilized the stablecoin tether, which is pegged to the US dollar, avoiding the volatility that affects other tokens, as reported by the WSJ. When questioned about the use of its tokens, Tether affirmed its commitment to preventing terrorist involvement, including freezing related wallets.