Understanding how Hamas uses cryptocurrency to fund terrorist activities

The cryptocurrency compliance technology company TRM reports that while the proportion of cryptocurrency used to fund terrorist activities is low, this trend is changing. With this recent attack, the use of cryptocurrency to fund terrorist activities is gaining more attention. It is alleged that Hamas is also the first terrorist organization to use cryptocurrency.

Hamas Terror Attack: Cryptocurrency Financing Raises Concerns Again

The military organization Hamas in the Gaza Strip has launched a large-scale attack against Israel, reportedly resulting in 1,200 Israeli deaths and nearly 6,000 injuries.

While the use of cryptocurrency for financing terrorist activities is relatively low compared to traditional currencies, preventing Hamas from raising and transferring funds has become a recent focus.

According to the cryptocurrency compliance technology company TRM, after the outbreak of violence in Gaza in May 2021, addresses controlled by Hamas received over $400,000 in donations.

TRM has identified some fundraising activities since the recent conflict began, such as the group GazaNow, which actively supports Hamas, receiving nearly $800,000 in donations since August 2021, with less than $5,000 in new donations following the recent attack.

Israeli Government Initiates Address Blockade

On October 10, the Israeli government claimed to have seized Hamas's cryptocurrency accounts, cutting off its online fundraising activities, and actively cooperating with international intelligence agencies to close the terrorist organization's cryptocurrency channels. The exchange Binance also assisted in the Israeli government's seizure efforts.

Amid the ongoing Israel-Palestine conflict, Binance collaborates with Israel to freeze Hamas accounts to cut off its financial support

Hamas: First Terrorist Organization to Use Cryptocurrency

According to TRM, since early 2019, Hamas's military force, Izz-Al Din-Al Qassam Brigades, has been attempting to use cryptocurrency as an alternative fundraising method to support its military operations. Hamas initially solicited Bitcoin donations on Telegram channels and later turned to direct fundraising on the website alqassam.net.

In August 2020, the U.S. Department of Justice (DOJ) announced the global dismantling of three terrorist financing operations, including the seizure of cryptocurrency accounts related to the al-Qassam Brigades.

The DOJ stated, "These three terrorist financing operations relied on sophisticated online tools, including soliciting cryptocurrency donations from around the world."

U.S. Secretly Controls Terrorist Financing Websites

In the first case, al-Qassam Brigades called for Bitcoin donations on their social media pages to fund their terrorist activities. Under judicial authorization, law enforcement agencies seized the infrastructure of the al-Qassam Brigades website and then operated alqassam.net secretly. This covert operation aimed to provide financial assistance to individuals supporting terrorist organizations, with the funds being transferred to wallets controlled by U.S. law enforcement.

U.S. and Israel Combat Hamas's Use of Cryptocurrency

TRM states that over the past few years, the Israeli National Bureau for Counter Terror Financing (NBCTF) has repeatedly targeted Hamas's use of cryptocurrency, seizing dozens of cryptocurrency addresses controlled by Hamas-affiliated entities, totaling millions of dollars.

These include businesses in Gaza, such as Dubai Co. For Exchange, al-Muhtadon, al-Mutahadun For Exchange, and al-Wefaq Co for Exchange. The seized funds mostly consist of Tether USDT on the Tron network.

NBCTF: Hamas Known to Utilize Complex Chain Pathways to Evade Sanctions

In July 2021, NBCTF issued an administrative seizure order concerning Bitcoin, Dogecoin, TRON, and other cryptocurrency addresses controlled by Hamas agents. NBCF's seizures illustrate that terrorism financing activities have become increasingly sophisticated, with the use of multiple blockchains and currencies to evade sanctions and law enforcement detection.

Hamas officials have stated that despite increasing restrictions on Hamas, their fundraising strategies are evolving, possibly shifting towards diverse asset donations and more complex money laundering methods.

Hamas Ceases Public Addresses, Turns to Payment Processors

Following the seizure of addresses by the Israeli government, radical organizations in Gaza, including Hamas, have stopped publicly sharing cryptocurrency donation addresses and have opted for payment processors.

For instance, in April 2023, the radical organization website al-Qassam Brigades announced the cessation of Bitcoin donations, citing:

"Concern for the safety of donors and to avoid causing them harm."

Meanwhile, al-Qassam Brigades acknowledge that cryptocurrency assistance has indeed been beneficial.

Israel Seizes Addresses All Using TRON USDT

According to TRM's report, in July 2023, NBCTF announced the issuance of seizure orders for dozens of addresses linked to the Palestinian Islamic Jihad (PIJ) organization involved in ongoing attacks. Additionally, millions of dollars in cryptocurrency from the Lebanese terrorist organization IRGC were also seized.

All 40 addresses on the seizure list are Tether USDT on the Tron network.

TRM has identified the interconnectedness of seized addresses with entities and exchanges in Iran, Syria, Iraq, and the Gaza Strip, all associated with the IRGC and Hezbollah.

TRM states that terrorist financing methods continue to evolve, and they will collaborate with global partners to prevent the use of cryptocurrency to fund terrorism.