The war between Israel and Hamas marked the biggest escalation in the Middle East since 1973, but now cryptocurrencies play a special role. The hostilities began with an attack by Palestinian militants on units of the Israel Defense Forces on the border with the Gaza Strip.
Israel boasts one of the world’s most advanced air defense systems, notably the Iron Dome, which effectively countered previous Hamas air attacks. In addition, the country is considering integrating the Iron Beam laser missile defense system into its defense infrastructure.
However, Hamas managed to accumulate significant resources for a large-scale offensive. In this light, cryptocurrencies allegedly play a significant role, as claimed by various media analysts.
Hamas’ Cryptocurrency Use
According to reports from the crypto analytics and software firm BitOK, based in Tel Aviv, Hamas acquired $41 million in cryptocurrency between August 2021 and June 2023. Similarly, the Palestinian Islamic Jihad (PIJ), which collaborated with Hamas during the attack, additionally received $93 million in cryptocurrencies, as revealed by the London-based crypto researcher Elliptic.
'You can’t shut down Bitcoin, but you can certainly blacklist the addresses making it almost impossible for people to trade peer to peer, and use the funds to finance these wars.'
Cryptocurrency expert Layah Heilpern details how crypto accounts linked to Hamas can be shut down. pic.twitter.com/Lc87ZfQlqn
— GB News (@GBNEWS) October 12, 2023
Further analysis by Elliptic unveiled that the al-Qassam Brigades, Hamas’ military arm, received substantial cryptocurrency transfers, including bitcoin, tether, and other digital assets. Elliptic also indicated that some of these groups are actively engaged in crypto-mining. This enabled them to gain additional revenue through the maintenance of cryptocurrency networks.
In a recent statement to CNN, Arda Akartuna, a researcher with Elliptic, highlighted Hamas and its al-Qassam Brigades as among the most successful initiators of cryptoasset-based fundraising. Akartuna noted that tracking cryptocurrency associated with the Al-Qassam Brigades is a difficult task. The complexity arises from the group’s reliance on “one-time-use” crypto addresses generated for each individual donor. Additionally, illicit money exchanges anonymously convert cryptocurrency into cash without any records.
In response to these revelations, the Israeli government has recently frozen numerous cryptocurrency accounts linked to Hamas.
Who Supports Hamas and Concerns Over Cryptocurrencies
As various media analysts note, cryptocurrencies make it possible to bypass international sanctions.
Iran has become a key financial backer of Hamas. The US State Department said the Palestinian militant organization’s annual contribution is about $100 million. In addition, Qatar and Turkey also provided financial support to Hamas, Deutsche Welle reports.
In 2019, the al-Qassam Brigades reportedly asked for Bitcoin donations through their Telegram channel, attaching a wallet address. Later in April 2023, Hamas announced it would end its Bitcoin fundraising efforts due to increased resistance.
It’s alarming and should be a wakeup call for lawmakers and regulators that digital wallets connected to Hamas received millions of dollars in cryptocurrencies. https://t.co/yUVSIElI8v
— Elizabeth Warren (@SenWarren) October 11, 2023
Along with this, Wall Street Journal reports state that Israeli authorities initiated actions to confiscate cryptocurrency from several Hamas-linked Binance accounts. The US Department of Justice has launched an investigation into the exchange’s potential lapses in preventing money laundering.
US Senator Elizabeth Warren expressed her concerns via X, formerly Twitter. She highlighted that it was “disturbing and should be a wake-up call to lawmakers and regulators that Hamas-linked digital wallets have received millions of dollars in cryptocurrency.”
According to the UN, cryptocurrencies could potentially account for up to twenty percent of the financing of terrorist attacks.
Russian Crypto Exchange Suspected of Financing Hamas
Reports say Hamas received money from Russian exchange. The Wall Street Journal cited Elliptic’s data, highlighting how the recent terrorist activities were partially financed through the Moscow-based Garantex crypto exchange.
The exchange is situated in the prestigious Moscow City business center, with its office located in the renowned Federation Tower. This building is known as the “most expensive skyscraper in Russia.”
Street to the sky. "Federation Tower" business quarter "Moscow City" pic.twitter.com/llWheXJ0Ju
— Natali (@Natali251212) December 15, 2018
As reported, despite sanctions from the US Treasury, Garantex continued to thrive, processing over $865 million in transactions in June. This marks a threefold increase compared to the period right after the sanctions were enforced in April 2022.
In 2021, Bloomberg described this 97-story glass skyscraper as a hub for cybercriminals. The outlet noted the building housed offices of a dozen companies that converted cryptocurrency into cash since 2018.
Furthermore, it was disclosed that Moscow itself had harbored at least fifty such companies over the past decades. Some of these were allegedly linked to illicit activities.