Massachusetts Senator Elizabeth Warren has once again targeted the cryptocurrency industry, using Hamas’ attack on Israel to support her campaign against digital currencies. In recent weeks, there have been reports of Hamas using crypto accounts for donations, leading to the freezing of these accounts by Israeli authorities. However, the amount of crypto raised by Hamas is reportedly minimal compared to the overall funding it receives.
Warren, along with over 100 US lawmakers, sent a letter to the Biden administration urging them to crack down on Hamas and its cryptocurrency wallets. The letter requested the administration to provide estimates on the value of crypto assets in Hamas-controlled wallets, the extent to which Hamas relies on crypto for funding, and information on actors facilitating the transfer of crypto to and from militant groups.
In response to Hamas’ use of crypto, the US Treasury Department sanctioned a Gaza-based crypto broker known as Buy Cash Money and Money Transfer Company (Buy Cash). The sanctions were imposed after a Bitcoin transaction worth just $2,000 was identified. It is worth noting that this amount is relatively insignificant compared to the hundreds of millions of dollars Hamas is believed to receive through other means.
While there have been concerns about terrorist financing through cryptocurrency, experts argue that these fears are often exaggerated. The dollar remains the preferred choice for money launderers, as crypto transactions are easily traceable on the blockchain. Additionally, terrorists have other avenues for obtaining funds, such as siphoning aid money from the international community. For example, the United Nations reportedly spent billions in Gaza, including $600 million in 2020 alone, despite Hamas diverting funds for its own purposes.
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Elliptic.co, a blockchain analysis provider, suggested that Hamas did receive some cryptocurrency around the time of the attack. However, it is not the primary source of funding for the organization. Hamas primarily relies on the traditional banking system, money service businesses, and informal transfers known as “hawala” to launder funds. The group began publicly seeking crypto donations in 2019 but now uses payment processors to create crypto addresses and hide its wallets.
Given the transparent nature of crypto transactions, Hamas’ use of crypto is easily detectable and has led to freezing actions by authorities. However, the amount of crypto received is relatively small compared to the overall budget of Hamas, which is estimated to be around $300 million per year. Therefore, claims of crypto being a significant threat in terrorist financing are misleading when compared to the fiat funds that flow through these organizations.
Warren’s focus on crypto as a means of combating terrorist financing may be misguided. It distracts from more meaningful discussions about how terrorist organizations raise funds through the traditional financial system. Yaya Fanusie, a former CIA analyst, argues that terrorist financing methods are diverse and adaptive, requiring constant vigilance from authorities.
In conclusion, while there have been instances of terrorist organizations using crypto for funding, these cases are relatively small compared to their overall activities. The focus on crypto as a means of combating terrorism may be disproportionate and divert attention from more significant issues in the fight against terror financing.
