How Cryptocurrency Fueled Hamas' Terror Attack on Israel

Iran is considered one of Hamas’ most prominent financial backers. According to the US State Department, the Middle Eastern power provides Hamas and other Palestinian terrorist groups with around $100 million a year in funding. Qatar and Turkey have also financially backed Hamas.

Cryptocurrencies have made it easier for Hamas supporters in areas hostile to the group to get around sanctions. As early as 2019, the al-Qassam Brigades were asking supporters on its Telegram social media channel to send bitcoin.

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

Payments Under Pressure from Authorities
In April 2023, however, the group said it would cease its bitcoin fundraising. This was due to a “doubling of hostile efforts against everyone who tries to support the resistance through this currency,” they said on Telegram.

Cryptocurrency is still far from the largest funding source for terrorism, but there is a growing focus on cutting off this channel to Hamas.

Following the October 7 attack, Israeli authorities announced they had frozen several Hamas-linked cryptocurrency accounts, saying the group had organized another call for fundraising on social media.

The Police Cyber Unit and Ministry of Defense immediately took action to locate and freeze these accounts, with the assistance of the Binance crypto exchange, in order to divert the funds to the state treasury,” a police statement said.

Binance is the world’s largest cryptocurrency exchange. While it is cooperating with Israeli authorities, the exchange is itself under scrutiny for the indirect but significant role it has played in financing terrorism. In recent years, authorities have attempted to seize cryptocurrency held on dozens of Hamas-linked Binance accounts, according to reports from the Wall Street Journal. The US Justice Department has also been investigating the crypto exchange for failure to prevent money laundering.

Binance Investigation Highlights Criminal Activities
Internal Binance communications revealed in court proceedings indicate that while Binance may not seek out criminal customers, it is aware of and tolerates this customer base.

In one internal exchange, former compliance chief Samuel Lim wrote that terrorists usually send small sums, as large sums would constitute money laundering.

You can’t buy an AK 47 [assault rifle] for $600,” a colleague responds. Binance did not respond to DW’s request for comment.

The United Nations estimates that cryptocurrencies account for 20% of terror financing in the world. The recent seizure of the Hamas accounts has renewed scrutiny of cryptocurrencies. Critics say crypto is the perfect funding tool for criminals because the payments can be difficult to track and can evade financial regulations.

It’s alarming and should be a wake-up call for lawmakers and regulators that digital wallets connected to Hamas received millions of dollars in cryptocurrencies,” US Senator Elizabeth Warren wrote on X, formerly Twitter. “Crypto is the not-so-secret financial weapon funding terrorist organizations like Hamas, Chinese fentanyl networks and North Korea’s missile program.”

Update: On October 25, 2023, crypto researcher Elliptic released a statement claiming that The Wall Street Journal, which originally broke this story, misrepresented data provided by them and other firms in the US newspaper’s coverage of this subject. Elliptic, whose work is aimed at preventing the illicit use of cryptoassets, says it is not clear how much cryptocurrency has been accessible to Palestinian terror groups, and that while Hamas has been known to solicit Bitcoin donations, there is no evidence that crypto fundraising had raised funds close to what was originally reported. This article has been updated to clarify that the funds mentioned were sent to accounts with links to Hamas, though it is unclear how much money the terror group ultimately had access to. 

Kristie Pladson is a reporter and TV presenter with DW Business. This article was edited by Uwe Hessler, and it is published courtesy of Deutsche Welle (DW).