A crackdown on cryptocurrency accounts linked to Hamas has reignited scrutiny of digital assets after the terrorist group attacked Israel. Criminal and terrorist organizations use crypto to bypass laws and sanctions.
Israel is one of only nine global nuclear powers and boasts one of the world's most advanced and interconnected air defense systems. Israel's "Iron Dome" has been largely successful at repelling air attacks from Hamas for years.
But on October 7, Hamas — an Islamist militant group and de facto governing authority in Gaza that is classified as a terrorist organization by the EU, the US, Germany and other governments — succeeded in overwhelming those defenses, firing more than 2,000 rockets into Israel from inside the Gaza Strip.
How did Hamas gather the resources for such a sophisticated attack against one of the world's most well-prepared militaries? According to analysts, cryptocurrencies played a significant role.
Millions in crypto funding
As a designated terrorist entity, Hamas faces sanctions and exclusion from the international banking system. Global counterterrorism financing measures go after any fundraising attempts by the group. Even so, reports show Hamas received a significant amount of funding in the form of cryptocurrency in the years leading up to the terrorist organization's latest brutal attack on Israel.
Hamas received $41 million (€39 million) between August 2021 and June 2023, according to crypto analytics and software firm BitOK, which is based in Tel Aviv. The Palestinian Islamic Jihad (PIJ), whose militants joined Hamas in carrying out the attack, received another $93 million in cryptocurrencies, according to London-based crypto researcher Elliptic.
The al-Qassam Brigades, the military wing of Hamas, have also received millions of dollars of cryptocurrency transfers, according to an Elliptic analysis. These transfers came in the form of bitcoin, the stablecoin tether and other crypto-assets, including dogecoin, a cryptocurrency popular with Elon Musk that was initially invented as a joke.
Some of these groups are even involved in crypto-mining, Elliptic says, which allows them to earn more money from the basic maintenance of cryptocurrency networks.