How cryptocurrencies boosted Hamas’ attack on Israel – 10/17/2023 – Market

Israel is one of nine global nuclear powers and has one of the most advanced and interconnected air defense systems in the world. For years, Iron Dome has been quite effective in repelling air strikes by Hamas — a radical Islamic group that has ruled Gaza since 2007 and is classified as a terrorist organization by the European Union, the United States, Germany, Japan, Israel and others.

On October 7, however, Hamas managed to overcome this defense system, firing more than 2,000 rockets at Israel from the Gaza Strip. The attacks have so far left more than 1,400 people dead in Israeli border towns and at a music festival, and Israel’s military retaliation has killed more than 2,600 in Gaza.

But how did Hamas manage to gather resources for such a sophisticated attack against one of the best-prepared armies in the world? According to analysts, cryptocurrencies have played a significant role.

Hamas has millionaire financing

As a terrorist organization, Hamas faces sanctions and does not participate in the international banking system. Global measures to combat terrorist financing track any fundraising attempts by the group. Still, reports show that Hamas has received considerable funding in the form of cryptocurrency in recent years.

Between August 2021 and June 2023, Hamas received US$41 million (R$208 million), according to Tel Aviv-based cryptofinance software and analysis company BitOK. Palestinian Islamic Jihad, whose militants joined Hamas for the attack, received another $93 million in cryptocurrencies, according to London-based crypto industry research firm Elliptic.

Al-Qassam brigades, the military wing of Hamas, also received millions of dollars in cryptocurrency transfers, according to analysis by Elliptic. These transfers came in the form of bitcoin, tether and other crypto assets, including dogecoin, a cryptocurrency that Elon Musk has expressed sympathies for, initially invented as a joke.

Some of these groups are even involved in cryptocurrency mining, according to Elliptic, which allows them to make more money from the basic maintenance of digital money networks.

Cryptography allows you to circumvent sanctions

Under the rule of Hamas, Gaza faces severe economic isolation by several countries. Blockades by neighboring Israel and Egypt restrict the movement of goods and people.

Despite the restrictions, the American magazine Forbes named Hamas one of the richest terrorist groups in the world in 2014, when its annual revenue was estimated at up to US$1 billion. This amount comes from taxes and fees, as well as financial aid and donations. Much of Hamas’ funding comes from Palestinians abroad or private donors in the Gulf region.

Iran is considered one of Hamas’ most prominent financiers. According to the US State Department, the country provides Hamas and other Palestinian terrorist groups with around US$100 million (R$503 million) per year. Qatar and Turkey have also supported Hamas financially.

Cryptocurrencies have made it easier for Hamas supporters to evade sanctions in areas considered hostile. In 2019, the Al-Qassam brigades asked supporters to send them bitcoins on their Telegram channel.

“The reality of jihad is the expenditure of effort and energy, and money is the backbone of war,” Hamas wrote in that post, attaching a wallet address to which it received about $30,000 in bitcoin that year.

Authorities investigate payments

In April 2023, Hamas reported on Telegram that it would suspend fundraising via bitcoin, due to the “redoubled efforts of enemies against everyone trying to support the resistance through this currency.”

Cryptocurrencies are still far from the largest source of funding for terrorism, but there is also a growing focus on cutting off this channel for Hamas. Following the October 7 terrorist attacks, Israeli authorities announced that they had frozen several cryptocurrency accounts linked to Hamas and that the group had organized another fundraising call on social media.

“The Police Cyber ​​Unit and the Ministry of Defense immediately took action to locate and freeze these accounts, with the help of the cryptocurrency platform Binance, in order to direct the funds to the state treasury,” a police statement said.

Binance is the largest cryptocurrency operator in the world. But although he is cooperating with Israeli authorities, he is also under investigation for the indirect but significant role he played in financing terrorism.

In recent years, authorities have attempted to seize cryptocurrencies held in dozens of Binance accounts linked to Hamas, according to reports in The Wall Street Journal. The US Department of Justice is also investigating the company for failing to prevent money laundering.

Complicity between operators and terrorists?

Binance’s internal communications revealed in court filings indicate that while the company does not directly target customers who commit crimes, it is aware of and tolerates this practice.

In an internal message, former head of compliance Samuel Lim commented that terrorists usually send small amounts, as large amounts would constitute money laundering. “You can’t buy one [fuzil] AK 47 for US$600”, responds a colleague.

Binance did not respond to DW’s requests for comment.

The UN (United Nations) estimates that cryptocurrencies account for 20% of terrorist financing in the world. And the recent confiscation of Hamas accounts has reignited the cryptocurrency debate. Critics say they are the perfect financing tool for criminals, as payments can be difficult to trace, thus bypassing financial regulations.

“It is alarming, and should be a warning to lawmakers and regulators, that accounts linked to Hamas have received millions of dollars in cryptocurrencies,” wrote US Senator Elizabeth Warren on platform X (formerly Twitter): “Cryptocurrency is the not-so-secret financial weapon that props up terrorist organizations like Hamas, Chinese fentanyl networks, and North Korea’s missile program.”