Report: Hamas Received $41 Million in Crypto Since 2021

The recent attack on Israel by Hamas reportedly may have been funded in part by cryptocurrency.

A review of Israeli government seizure orders and blockchain analytics reports revealed that Hamas and two other militant groups — Palestinian Islamic Jihad (PIJ), which joined Hamas in the assault, and Hezbollah — received significant amounts of funds through digital currencies in the year leading up to the attack, The Wall Street Journal (WSJ) reported Tuesday (Oct. 10).

Digital currency wallets linked to PIJ received as much as $93 million in crypto between August 2021 and June 2023, the report said, citing analysis by crypto researcher Elliptic. Similarly, wallets connected to Hamas received about $41 million over a similar time period, according to BitOK.

The use of cryptocurrency by these militant groups highlights the challenges faced by the U.S. and Israel in severing their access to foreign funding, per the report. Despite being designated foreign terrorist organizations and subject to sanctions, Hamas, PIJ and Hezbollah have managed to collect donations and amass weaponry. It is not known if the crypto directly financed the assault.

Crypto transactions allow these groups to bypass traditional banking systems by instantly transferring tokens between digital wallets, according to the report. Gaps in financial crime controls at crypto exchanges have allowed terrorist groups like Islamic State and al Qaeda to receive donations in digital currencies in the past, as noted by the U.S. Treasury Department.

Israeli authorities have taken action to freeze crypto accounts used by Hamas to solicit donations on social networks, the report said. However, it is difficult to determine the exact amount of crypto seized.

Hamas has been publicly seeking funds in crypto since at least 2019, using its Telegram channel to ask supporters to donate bitcoin, per the report. The group has since turned to payment processors to generate crypto addresses and obscure its true cryptocurrency wallet, making it harder for investigators to track transactions.

While crypto remains just one of the tools used by these militant groups to raise funds, it presents a unique challenge for authorities, according to the report. Smuggling cash over borders can be risky and easily detected, but crypto provides a more discreet and efficient method of transferring funds.

The U.S. Department of the Treasury said in an April report that many DeFi services have failed to implement anti-money laundering and countering the financing of terrorism (AML/CFT) obligations, PYMNTS reported at the time.

In addition, some DeFi services are not covered by existing AML/CFT obligations, some jurisdictions have weak or nonexistent AML/CFT controls in this area, and some DeFi services have weak cybersecurity controls, the Treasury Department said at the time.

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