Based on data from the Israeli government and blockchain analytics research, it has emerged that Hamas, the Palestinian Islamic Jihad (PIJ), and Hezbollah have been receiving large amounts of funding via cryptocurrencies. This is a startling discovery. This has sparked grave concerns regarding the funding of recent terrorist actions, such as Hamas’s recent invasion of Israeli territory. Since the US has classified these groups as foreign terrorist organizations, they are subject to sanctions and have restricted access to traditional financial channels. However, the usage of cryptocurrencies enables them to evade the global banking system.
According to cryptocurrency researcher Elliptic, between August 2021 and June 2023, PIJ received an incredible $93 million in bitcoin. In a similar vein, BitOK, a different company, discovered that over the same time frame, wallets connected to Hamas earned about $41 million. Nevertheless, the precise quantity taken from these cryptocurrency wallets is still unknown, and these monies have not been connected to the funding of any particular attacks.
.The Israeli government has responded to this financial backing by suspending Bitcoin accounts that were being used to raise money. To stop the flow of money that Hamas raises through social media campaigns, Israeli police blocked these accounts. Reports state that at the start of the most recent conflict, Hamas launched a social media fundraising drive encouraging people to add cryptocurrency to their accounts. The police moved quickly to find and freeze these accounts to transfer the money to the state treasury, working with the Binance cryptocurrency exchange.
It is important to remember that these terrorist groups mostly used the US dollar-denominated stablecoin tether for their transactions, which lessens the volatility that impacts other tokens. In response, Tether reiterated its resolve to prevent terrorist involvement by freezing wallets connected to such operations.
The utilization of cryptocurrencies by these extremist organizations has presented novel obstacles for governments aiming to restrict their operations and funding. Although cryptocurrencies have their benefits, they are also being used as a means of funding terrorist activities. Although it is too early to tell how these actions will affect the Israel-Gaza conflict, they do highlight the increasing significance of cryptocurrencies in the contemporary global financial system.