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Elliptic, a prominent blockchain analytics firm, has strongly denied recent allegations that Hamas used cryptocurrency to finance its attacks on Israel. The company argues that the transparent nature of blockchain technology makes it an ineffective tool for fundraising. This counters a report by The Wall Street Journal that suggested Hamas had used crypto for financing and was cited Democratic lawmakers who inquired about the use of cryptocurrency.
The Weakness of Crypto as a Fundraising Tool
Elliptic points out that cryptocurrency has inherent weaknesses as a fundraising tool for groups like Hamas. The primary weakness lies in the public nature of blockchain technology. Unlike traditional financial systems, all cryptocurrency transactions are recorded on a public ledger, making it much easier for law enforcement agencies to track and freeze assets associated with terrorist groups.
Contradicting The Wall Street Journal’s Claims
The Wall Street Journal’s report claimed that Hamas had raised “millions” in cryptocurrency. However, Elliptic has refuted this claim, stating that there is no concrete evidence to support it. The data provided by Elliptic and other experts has been misinterpreted, and it has been demonstrated that no public crypto fundraising campaign by a terrorist group has received significant donations relative to other funding sources.
Efforts to Clarify Misinformation
Elliptic has taken proactive steps to clarify the misinformation terrorist organizations surrounding the use of cryptocurrency. The company has reached out to the lead signatory of the inquiry, Senator Warren, and the authors of The Wall Street Journal article to provide a more accurate picture of the situation.
Tracking Funds and Frozen Assets
Furthermore, Elliptic has been actively tracking the flow of cryptocurrency funds. They reported that only $21,000 in cryptocurrency had been donated since October 7. Thanks to the diligent efforts of crypto businesses and researchers, a significant portion of this cryptocurrency has been successfully frozen, effectively preventing Hamas from using these funds for any nefarious purposes.
Chainalysis Advocates for a Nuanced Approach
Chainalysis, another prominent blockchain analysis firm, has advocated for a more nuanced approach to investigating how terrorist organizations potentially use cryptocurrency. They argue that it might appear that $82 million worth of cryptocurrency was raised for terror financing. However, it is much more likely that only a small portion of these funds were intended for terrorist activities, with the majority of the funds processed through the suspected service provider being unrelated to such activities.
Cryptocurrency for Humanitarian Causes
In contrast to its potential misuse, cryptocurrency has also been harnessed for humanitarian causes. An example is Crypto Aid Israel, which successfully raised over $185,000 in cryptocurrency. Additionally, the United Nations Relief and Works Agency for Palestine Refugees (UNRWA) enabled cryptocurrency donations a few years ago, demonstrating the positive potential of digital currencies for charitable purposes.
While there have been concerns about the use of cryptocurrency, Elliptic and other blockchain analytics firms assert that the public nature of blockchain technology limits its effectiveness as a fundraising tool for such organizations. The debate surrounding this issue underscores the need for nuanced analysis and responsible reporting in the cryptocurrency space.
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