Israel It is one of the nine world nuclear powers and has one of the most advanced and interconnected air defense systems in the world. Israel's "Iron Dome" has had great success in repel air attacks of Hamas during years.
But on October 7, Hamas – an Islamist militant group and de facto ruling authority in Gaza which is classified as a terrorist organization by the EU, the US, Germany and other governments, managed to overwhelm those defenses, firing more than 2,000 rockets to Israel from inside the Gaza Strip.
How did Hamas gather the resources for such a sophisticated attack against one of the The best prepared armies in the world.? According to analysts, cryptocurrencies played an important role.
Millions in crypto funding
As a designated terrorist entity, Hamas faces sanctions and exclusion from the international banking system. The global counterterrorism funding measures come after any fundraising attempts by the group. Still, reports show that Hamas received a significant amount of funding in the form of cryptocurrency in the years leading up to the terrorist organization's last brutal attack against Israel.
Hamas received $41 million (€39 million) between August 2021 and June 2023, according to Tel Aviv-based cryptocurrency software and analysis company BitOK. The Palestinian Islamic Jihad (PIJ), whose militants joined forces with Hamas to carry out the attack, received another $93 million in cryptocurrency, according to London-based cryptocurrency researcher Elliptic.
The al-Qassam Brigades, the military wing of Hamas, have also received millions of dollars in cryptocurrency transfers, according to an Elliptic analysis. These transfers occurred in the form of bitcointhe tether stablecoin and other crypto assets, including dogecoin, a cryptocurrency popular with Elon Musk that was initially invented as a joke.
Some of these groups are even involved in crypto miningsays Elliptic, allowing them to make more money from basic maintenance of cryptocurrency networks.
Cryptocurrencies allow donors to bypass sanctions
Under Hamas rule, Gaza has experienced severe economic isolation from many countries. Blockades with neighbors Israel and Egypt They have restricted the movement of goods and people.
Even with these restrictions, the American magazine Forbes named Hamas one of the world's richest terrorist groups in 2014, when its annual turnover was estimated to reach $1 billion. This came from taxes and fees, as well as financial aid and donations. Much of Hamas' funding comes from expatriates or private donors in the Gulf region.
Iran He is considered one of Hamas's most prominent financial backers. According to the US State Department, the Middle East power provides Hamas and other Palestinian terrorist groups around $100 million a year in funding. Qatar and Turkey They have also financially supported Hamas.
Cryptocurrencies have made it easier for Hamas supporters in areas hostile to the group to evade sanctions. Already in 2019, the al-Qassam Brigades asked their followers in their Telegram Social media channel to send bitcoins.
"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 the authorities
However, in April 2023, the group said it would stop raising funds in bitcoin. This was due to a "doubling down of hostile efforts against anyone trying to support the resistance through this currency," they said on Telegram.
Cryptocurrencies are still far from being the largest source of terrorist financing, but there is growing interest in cutting off this channel to Hamas.
Following the October 7 attack, Israeli authorities announced that they had frozen several cryptocurrency accounts linked to Hamas, saying the group had organized another fundraising call on social media.
"The Police Cyber Unit and the Ministry of Defense immediately took steps to locate and freeze these accounts, with the help of the Binance cryptocurrency exchange, in order to divert the funds to the state treasury," a police statement said.
Binance is the largest cryptocurrency exchange in the world. While it cooperates with Israeli authorities, the exchange itself is under scrutiny for the indirect but significant role it has played in terrorist financing. In recent years, authorities have attempted to confiscate cryptocurrencies contained in dozens of Binance accounts linked to Hamas, according to reports from the Wall Street Journal. The United States Department of Justice has also been investigating crypto exchange for not preventing money laundering.
Binance investigation highlights criminal activities
Binance internal communications revealed in court proceedings indicate that while Binance cannot pursue criminal clients, it is aware of and tolerates this client base.
In an internal exchange, former compliance chief Samuel Lim wrote that terrorists often 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 terrorism financing in the world. Recent seizure of Hamas accounts renewed cryptocurrency scrutiny. Critics say cryptocurrencies are the perfect financing tool for criminals because payments can be difficult to trace and can evade financial regulations.
“It is alarming and should be a wake-up call to lawmakers and regulators that digital wallets connected to Hamas have received millions of dollars in cryptocurrency,” US Senator Elizabeth Warren wrote on X, formerly Twitter. "Cryptocurrencies are the not-so-secret financial weapon that funds terrorist organizations like Hamas, Chinese fentanyl rings, and North Korea's missile program."
Edited by: Uwe Hessler
