Leading Blockchain Forensic Companies Dispel Myths Surrounding Crypto’s Role in Terrorism Financing
Elliptic is the latest on-chain research firm to refute claims that cryptocurrency is a major source of funding for Hamas, the Palestinian terrorist organization currently at war with Israel.
In an October 25 reportElliptic claims “there is no evidence to support the claim that Hamas received significant volumes of crypto donations,” contradicting recent statements by the Democratic senator, Elizabeth Warrenand the reports of Wall Street Journal (WSJ).
Earlier this month, the WSJ claimed that Hamas has collected approximately $134 million in cryptocurrency since 2021. Warren quoted last week’s report calling on the Biden administration to curb the use of crypto by Hamas and other militant groups, and to “address the serious national security threats posed by the use of crypto to finance terrorism.
However, on-chain researchers have failed to corroborate WSJ and Warren’s claims, with Chainalysis, TRM Labs and now Elliptic finding that digital assets played a minimal role in facilitating Hamas funding.
“Over the past two weeks, politicians and journalists have touted public crypto fundraising as an important source of funds for Hamas and other terrorist groups, but the data simply does not support this hypothesis,” a said Elliptic. “No public crypto fundraising campaign led by a terrorist group has received significant levels of donations, compared to other funding sources… A comprehensive understanding of blockchain analysis and context of any analysis is necessary to use this information to draw conclusions.”
The company said it had engaged with the WSJ and Senator Warren’s office “to correct misinterpretations of the level of crypto fundraising by Hamas” and “ensure that relevant parties have a proper appreciation of the complexities and the nuances of analyzing these portfolios.
Financing of terrorism
Elliptic said Hamas started solicitation cryptocurrency funding in 2019, with donations peaking in May 2021. However, Hamas suspended all digital asset fundraising from the public in April this year, with the group citing “concerns over donor security” amid efforts by Israeli authorities to identify and punish donors.
“This illustrates the weakness of crypto as a fundraising tool for terrorism,” Elliptic said. “Blockchain transparency allows illicit funds to be traced and, in some cases, linked to real identities.”
Elliptic reported that GazaNow, a pro-Hamas news agency, raised $21,000 in digital assets in the largest Hamas-linked crypto fundraising campaign since the October 7 terrorist attack on Israel.
However, GazaNow has since struggled to raise funds. Around $2,000 worth of digital assets were frozen after being sent to a centralized exchange. An additional $9,000 worth of USDT stablecoin was frozen by its issuer, Tether.
A recent report from TRM Labs similarly chronicles the persistent freezing of Hamas crypto fundraising efforts by Israeli and US authorities in recent years. TRM said the events demonstrate the sophistication of “law enforcement’s ability to track, trace and seize funds,” TRM Labs said.
Last week, the US Treasury Department also sanctioned a wallet associated with the Hamas-affiliated Buy Cash Money And Money Transfer Company. Coinbase CEO Conor Grogan tweeted that the sanctioned wallet contained only $11 worth of digital assets and had not made any transactions in 18 months.
In contrast, Elliptic said crypto-based fundraising efforts to support Israel have thrived, with Crypto Aid Israel receiving $185,000 in 12 days.
Opaque data
Elliptic discussed the origins of the recent WSJ claim that Palestinian terrorists are raising tens of millions of dollars through crypto.
In July, the Israeli National Counterterrorism Financing Bureau (NBCTF) issued an order to seize wallets associated with Palestinian Islamic Jihad (PIJ), a terrorist organization. Elliptic said the wallets had received more than $93 million since 2020, but noted that it was unclear whether all of those funds were directly attributable to JIP and other activists.
“It is likely that some of the wallets listed by NBCTF were owned by small service providers such as brokers used by PIJ,” Elliptic said. “A careful and detailed understanding of blockchain analysis is necessary whenever tackling a nuanced and sensitive topic like this, and the full context of any analysis must be provided by those using this information.”
A recent report from On-Chain Analysis analyzed counterparty wallets associated with an address “known to be affiliated with terrorist financing,” finding that at least 20 of the wallets in question were crypto service providers and not terrorist organizations.
“Of the approximately $82 million in cryptocurrency received at this address, approximately $450,000 of funds were transferred from the known terrorist-affiliated wallet,” Chainalysis said. “Given the activity of this address, the person or group of people controlling it is likely not the same person who controls the terrorist-affiliated wallet, but rather a service provider who knowingly or unknowingly has facilitated terrorist financing activity.”
