Israel-Hamas War: Israel May Use Crypto To Finance Another Tragedy

U.S. lawmakers are intensifying calls for the Biden administration to take immediate and decisive measures to prevent Hamas, the Palestinian organization designated as a terrorist group by the U.S., from exploiting cryptocurrencies for funding following the group’s latest attack in Israel.

Bipartisan Concern Over Crypto Use by Terrorist Entities In a collaborative move reflecting growing bipartisan apprehension, 105 legislators spearheaded by Senators Elizabeth Warren, Roger Marshall, and Representative Sean Casten dispatched a letter to the U.S. Treasury Department and the White House on Tuesday. They voiced “grave concern” regarding indications that Hamas and an associated entity, the Palestinian Islamic Jihad, are harnessing digital currencies to underwrite their agendas and circumvent U.S. sanctions.

The congressional members underscored the urgent need for robust strategies to mitigate the risk of cryptocurrencies being used to bankroll further violent acts. Congress and this administration must take strong action to thoroughly address crypto illicit finance risks before it can be used to finance another tragedy,” the lawmakers asserted in their letter.

Israeli Crackdown on Crypto Accounts Linked to Hamas This appeal from U.S. lawmakers follows an announcement by Israeli police on October 10, confirming the freezing of multiple cryptocurrency accounts purportedly involved in fundraising activities for Hamas. Moreover, a Reuters report from May revealed that since the onset of 2021, Israeli authorities have appropriated approximately 190 crypto accounts on the Binance exchange platform, identifying numerous accounts as linked to Palestinian entities associated with Hamas.

In response, Binance emphasized its commitment to global counter-terrorism efforts, affirming close collaboration with relevant international authorities regarding the account seizures.

Crypto’s Anonymity a Boon for Illicit Activities The foundational promise of cryptocurrency—its capacity for facilitating anonymous transactions—has not only attracted everyday users but also those intent on skirting legal and regulatory oversights. Consequently, a series of federal crackdowns addressing fraud, money laundering, and unauthorized coin offerings has cast a harsh light on the sector.

As per a Reuters investigation published on Monday, Hamas exploits an extensive international financing network, which includes the utilization of cryptocurrencies, to gather resources through charities and allied nations.

Substantial Seizures Yet Ongoing Concerns Blockchain analysis firm TRM Labs has reported that Israeli officials have confiscated “tens of millions of dollars” worth of cryptocurrencies from addresses connected to Hamas over recent years.

In their letter, the U.S. legislators have sought comprehensive data from the Biden administration, including the estimated value of cryptocurrency assets currently held in Hamas-affiliated digital wallets, the extent of Hamas’ operations financed via cryptocurrency, and intelligence regarding individuals or groups orchestrating the cryptocurrency transfers to and from Hamas and similar organizations.

The proactive involvement of political leaders underscores the increasing recognition of cryptocurrency’s role in global finance and the imperative for stringent controls to prevent its abuse by designated terrorist organizations like Hamas.