Less than three weeks after The Wall Street Journal asserted that Palestinian group Hamas had received tens of millions of dollars worth of crypto donations to fund its attacks on Israel, the media outlet is singing a different song.
The WSJ article in question had earlier stated that digital-currency wallets allegedly linked to Hamas and Palestine Islamic Jihad (PIJ) — cumulatively received over $130 million in crypto between August 2021 and June 2023, citing research by blockchain surveillance firm Elliptic. It went on to claim that the militant groups used the funds to finance their “terrorist” activities.
US lawmakers raise alarm bells over crypto’s threat to national security
The article even crept through the doors of the White House and the US Department of Treasury—with some US lawmakers calling for “strong action” to dial down the risks associated with cryptocurrencies financing illegal activities. They are convinced that crypto poses a security threat to the US and its allies.
WSJ’s dramatic U-turn
However, there’s one problem: the claims made by the WSJ were bogus. Elliptic has since clarified that although Hamas and PIJ have relied on crypto crowdfunding, it doesn’t imply that the capital raised was used to fund terrorist activities.
Blockchain analysis firm Chainalysis has shed further light on the issue, saying that only $450,000 of the crypto funds raised went to a known terrorism-linked wallet.
Now, the WSJ appears to have rectified its error — albeit barely — suggesting that PIJ and Lebanese political party Hezbollah “may have exchanged” about $12 million in crypto. That’s significantly lower than the initial figure provided by the media outlet, which put the funds received by PIJ via crypto at $93 million.
WSJ faces backlash from the crypto community
Paul Grewal, chief legal officer of crypto exchange Coinbase, has called out the WSJ, saying, “This is barely a correction.” Meanwhile, some are demanding that US Senator Elizabeth Warren retract the letter that cited the WSJ’s article and was sent to the White House.
Is crypto really the main source of funds for militant groups? Data suggests otherwise
The role of cryptocurrency in terrorist financing has come under renewed scrutiny amid the ongoing Israel-Hamas conflict. While politicians and journalists have been quite vocal over the past few weeks about how groups like Hamas have been using cryptocurrencies to fund terrorist attacks, Elliptic argues that the data paints a different picture.
In April, Hamas stopped accepting donations made via Bitcoin, citing “concern about the safety of donors.” Meanwhile, Israeli authorities have seized hundreds of crypto wallets and exchange accounts linked to militant groups since 2021.
Citing these events, Elliptic contends that crypto may not be the ideal vehicle to facilitate terrorism fundraising. It further noted that blockchains such as Bitcoin and Ether create a trail of transactions, allowing illicit funds to be traced.