Militants Funded by Crypto Raised Millions for Israel Attack

 Militants Funded by Crypto Raised Millions for Israel Attack

After Hamas launched a surprise attack on Israel last weekend, analysts are wondering how the organization was able to fund the action. The solution could be cryptocurrencies.

According to an analysis of Israeli government seizure orders and blockchain analytics data, three terrorist groups—Hamas, Palestinian Islamic Jihad, and its Lebanese partner Hezbollah—received substantial sums of money via cryptocurrency during the year before to the assaults.

Leading cryptocurrency researcher Elliptic's study revealed that between August 2021 and June of this year, digital-currency wallets associated with the PIJ by Israeli authorities received up to $93 million in cryptocurrency.

According to analysis by another crypto analytics and software company, Tel Aviv-based BitOK, wallets linked to Hamas got nearly $41 million more during a comparable time span.

On Saturday, PIJ and Hamas militants stormed Israel from the Gaza Strip, murdering almost 900 people and kidnapping at least 100 more. Since Israel responded with a barrage of airstrikes on Gaza, at least 700 Palestinians have perished.

The Izz ad-Din al-Qassam Brigades, the military branch of Hamas, did not reply to a request for comment about the use of crypto by the organizations. It was unable to contact the PIJ or Hezbollah for comment.

The U.S. government has branded all three militant groups as foreign terrorist organizations, and the Treasury Department has imposed restrictions on them that prevent them from using the global financial system. Anyone detected doing business with such organizations runs the danger of being charged with a crime and facing personal consequences.

Western terrorist experts and former officials claim that the crypto transactions show how the U.S. and Israel have battled to cut off the organizations' access to overseas funds. Under the government of Israel's nose, PIJ and Hamas, which rules Gaza, were allowed to gather weapons and other supplies in preparation to launch the biggest breach of Israeli borders since the 1973 Yom Kippur War.

It was unable to tell whether the cryptocurrency they received was utilized to pay for the attack directly. Furthermore, it was unclear how much cryptocurrency the Israeli police recovered from the wallets. According to researchers, it was probably a tiny portion of the total amount of money that passed through them.

As part of their ongoing search for the "financial infrastructure involving cryptocurrencies used by terror entities to fund their activities," Israeli police announced on Tuesday that they had frozen further cryptocurrency accounts used by Hamas to ask for contributions on social media.

By immediately moving tokens between digital wallets, which are often stored at a cryptocurrency exchange, crypto enables consumers to avoid banks. In a study published last year, the U.S. Treasury Department said that weak financial crime controls at such crypto exchanges might enable terrorist organizations to abuse them, adding that both the Islamic State and al Qaeda have received cryptocurrency payments.

Israeli Defense Minister Yoav Gallant said that the use of digital currencies was making the task of preventing terrorist funding increasingly more difficult after an operation in June to collect crypto belonging to Hezbollah.

It's not going to be simple, Gallant remarked.

Israel's National Bureau for Counter-Terror Financing also asked for the confiscation of any cryptocurrency stored on 67 customer accounts at Binance, the biggest cryptocurrency exchange in the world, in an order the following month against the PIJ wallets. In other rulings this year, the FBI tried to seize assets from Binance in cases involving Hamas and Hezbollah. According to the Journal, the U.S. Justice Department is looking at the company's anti-money-laundering measures in great detail.

According to a representative for Binance, the exchange regularly collaborates with law enforcement organizations, including those in Israel, to fight the funding of terrorism.

The spokeswoman stated, "Over the last several days, our team has been working in real time, around the clock, to assist continuing efforts. The latest account freezes were conducted with Binance's cooperation, according to Israeli police reports from Tuesday.

Cryptocurrency is still one of the techniques used by Hamas to generate money, according to researchers who investigate the organization's funding, along with other methods like transferring money into Gaza from Egypt. According to the U.S., Iran has long been the main donor to these organizations, providing an estimated $100 million year.

"Crypto is another string in their bow," said Joby Carpenter, a cryptocurrency and illicit finance expert at ACAMS, a professional organization for those tasked with combating financial crime.

Since at least 2019, when the al-Qassam Brigades started requesting bitcoin donations from fans on their Telegram channel, Hamas has been openly attempting to collect money via cryptocurrency. The organization posted an article with the statement, "The reality of jihad is the expenditure of effort and energy, and money is the backbone of war," and it included the wallet address that had received roughly $30,000 in bitcoin that year.

According to Ari Redbord, a former senior Treasury official who is now the director of global policy at TRM Labs, a blockchain-intelligence startup that follows the organization, the group is one of the most knowledgeable cryptocurrency users in the terror-finance space.

After Israeli and American investigators followed the transactions on the blockchain—the public ledgers that compile information on all digital currency transactions—Hamas stopped disclosing its contribution addresses to safeguard contributors' identities.

Since then, according to Redbord, Hamas has resorted to payment processors that create crypto addresses and helps in hiding its genuine cryptocurrency wallet. Links to these processors are included in the fundraising sections of their websites.

The al-Qassam Brigades announced in April that they will cease accepting bitcoin payments and advised supporters to make other contributions. The organization said on Telegram that this was done "out of concern for the safety of donors," noting a "dodging of hostile efforts against everyone who attempts to support the resistance through this currency."

The seizure warrants revealed that Hamas and PIJ had already amassed millions of dollars in cryptocurrency.

According to Elliptic's study, the groups were utilizing cryptocurrency not just to raise money but also to transfer money among themselves. The London-based research company discovered that the various organizations were also exchanging money across wallets, with the PIJ transmitting over $12 million in cryptocurrency to Hezbollah since 2021.

They avoided the instability that other tokens experience by predominantly using the stablecoin tether, which is anchored to the U.S. dollar, for transactions. An inquiry for comment was not immediately answered by the Tether foundation.

The use of cryptocurrencies is "much easier than smuggling cash over Egypt's border," according to Matthew Price, a former IRS inspector who now oversees Elliptic's business dealing with law authorities.