The ongoing deadly conflict between Hamas and Israel has presented another challenge to the crypto industry and the global market. On October 10, 2023, Israeli authorities froze multiple Hamas-linked crypto accounts, which were being used to raise funds in support of the ongoing war.
Crypto funding flows to militant groups
An investigation, based on the seizure of these crypto accounts by Israeli authorities and blockchain analysis, revealed that Hamas, Palestinian Islamic Jihad (PIJ), Hezbollah, and other related militant groups had received millions of dollars in cryptocurrency funding for their involvement in the ongoing conflict. The use of cryptocurrencies for funding such activities highlights the difficulties that governments face and underscores the need for strict regulations in the cryptocurrency space.
According to a recent report that might astound you, between August 2021 and June 2023, crypto accounts associated with Palestinian Islamic Jihad (PIJ) received approximately $93 million in cryptocurrencies, according to the analysis conducted by crypto researcher Elliptic. Similarly, during the same time frame, crypto accounts associated with Hamas received nearly $41 million in cryptocurrencies, as reported by BitOK.
Despite being designated as foreign terrorist organizations by the United States, these groups continued to solicit crypto donations and procure weaponry. However, it remains to be seen whether these raised funds are directly linked to the ongoing war.
Israel’s seizure of Binance wallets
These groups may opt for cryptocurrencies in their donation campaigns due to the instant and anonymous transfers they offer between wallets, making it more challenging for authorities to trace and regulate. As reported by Todayq News on May 5, 2023, Israeli authorities had previously seized over 190 Binance crypto wallets linked to Hamas, as they were utilizing them for fundraising and engaging in illegal activities.
For these militant groups, cryptocurrency serves primarily as a robust fundraising medium, posing challenges for authorities regarding tracking and monitoring. Using physical currency across borders carries risks and is easily detectable. This situation raises concerns about the effectiveness of sanctions and underscores the need for stronger cooperation in regulating and monitoring financial transactions.