How implicated is Binance when it comes to terrorist funding? | Credit: Shutterstock
- Earlier this year, a US regulator accused Binance of knowingly tolerating illicit activity on its exchange.
- The CFTC leveled both Binance’s founder and Chief Compliance Officer with multiple charges back in March.
- One of the organizations mentioned in the charge was the militant organization Hamas.
On October 7, Hamas, a Palestinian political and militant organization based in Gaza, began crossing the border into Israel, killing hundreds of Israelis. But how did Hamas—a widely sanctioned organization—gather the funds for such a well-organized attack?
One potential answer is cryptocurrency. At the moment, the focus is shifting towards crypto firms like Binance, who have previously been linked with the militant group.
Have Hamas Had Dealings with Binance?
According to local reports , on the morning of October 10, Israeli police confirmed they had successfully shut down crypto accounts used to solicit donations.
Furthermore, Israeli law enforcement and intelligence agencies say they worked with Binance to close the group’s access to funding.
CCN reached out to Binance for comment on this story. In response, a Binance spokesperson confirmed they had worked with Israeli authorities on the matter.
It stressed that the company had worked around the clock in recent days to combat terror financing and that Israeli authorities had acknowledged the company’s contributions back in June. It also pointed out that one of its investigators was responsible for seizing assets related to terrorist activities in Israel before joining the company.
Although this isn’t the first, the world has heard of Hamas’ links to the cryptocurrency exchange.
US Regulator Says Binance Was Lax on Compliance
In March, a complaint by the CFTC accused Binance of knowingly dealing with Hamas funding. In the complaint, the regulator painted a picture of an exchange that receives funds from suspect organizations without worry.
According to the CFTC complaint , in February 2019, Samuel Lim, the Chief Compliance Officer of Binance, explained that “regarding HAMAS transactions” on Binance, he noted terrorists typically send “small sums” because “large sums constitute money laundering.” Lim’s colleague allegedly replied: “Can barely buy an AK47 with 600 bucks.”
According to internal communications seen by the CFTC, Lim was also at least highly suspicious of many Russia-based transactions. In the complaint, Lim is quoted in February 2020 saying: “Like come on. They are here for crime.”
There is no suggestion that Binance is a direct supporter of Hamas. But, the US regulator alleges that the exchange has facilitated criminal activity on a number of occasions. And not just with Hamas.
Why Would Hamas Use Cryptocurrency?
If Hamas are proven to have used a cryptocurrency exchange like Binance, they wouldn’t be the first sanctioned organization to do so.
A 2022 report by the Combating Terrorism Center in the US has identified multiple terrorist organizations operating in Syria. Militant groups, including Islamic State, al-Qaida, and the Al-Nusra Front, have used digital currencies to facilitate their campaigns of violence.
The Lazarus Group, an infamous hacker organization supported by the North Korean government, has long been associated with its use of digital currencies.
Sanctioned organizations like Hamas employ cryptocurrencies primarily to evade sanctions and conceal funds. By operating outside the conventional banking system, these groups can access and move funds with relative anonymity, making it difficult for authorities to trace and freeze their assets.
However, Binance’s recent links to Hamas are only the latest sore in Binance’s ongoing battle with US regulators.
Binance Faces a Potential DOJ Investigation
But why would Hamas use a big, centralized exchange such as Binance? The Combating Terrorism Center report has noted that militant groups often lack the technological know-how for more sophisticated solutions.
Groups need internet access, knowledge of digital currencies, and access to vendors or facilitators for conversions. Binance’s simple user interface may have offered an easier way of gaining access to the cryptocurrency markets.
However, Binance’s behavior may have made this easier. As the CFTC complaint points out, Binance’s lack of compliance checks offered a gateway for groups wanting to use the platform for illicit activities.
Samuel Lim, its compliance chief, allegedly warned staff against “off-boarding” users associated with illicit activity as it went against the business strategy of its founder, Changpeng Zhao.
As well as the multiple charges from the CFTC, Binance also faces charges from the Securities and Exchange Commission, and rumors of a Department of Justice investigation. Meanwhile, Binance and its executives deny all wrongdoing.
