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How Hamas Crypto Fundraising Claims Were Blown Out Of Proportion

Last Updated October 26, 2023 11:52 AM
James Morales
Last Updated October 26, 2023 11:52 AM
Key Takeaways
  • On October 10, the Wall Street Journal reported that Hamas had raised $130M from crypto donations.
  • Elliptic, the company that provided the numbers, has now called out the Journal for misconstruing its data.
  • With debates over AML/CFT raging, accurate reporting is critical.

The role of cryptocurrency to fund violent groups has long been a bone of contention for advocates of stricter anti-money laundering and counter-financing of terrorism (AML/CFT) rules. Recently, Hamas’ horrific October 7 attack against Israel further enflamed the debate, following reports that the group had raised hundreds of millions of dollars in crypto.

In the US, lawmakers quickly caught on to a Wall Street Journal (WSJ) article suggesting that Hamas and the Palestinian Islamic Jihad (PIJ) collectively raised over $130M in crypto. But now, it turns out the figures were blown way out of proportion.

Pressure Mounts of WSJ to Rescind Hamas Crypto Fundraising Claims

The $130M figure first appeared in an October 10 report  in the WSJ, which cited data from Eliptic and BitOK. 

A week later a bipartisan group of US lawmakers led by Senators Elizabeth Warren and Roger Marshall wrote to the White House expressing their “grave concern” over militant groups’ use of crypto.

Having already cited the Journal’s reporting in their letter calling for the Biden Administration to act on the illicit use of cryptocurrency, an article  penned by Warren and Marshall appeared in the paper the next day. In it, the Senate’s leading crypto critics argued that digital currencies have become a “crucial pipeline for financing terrorist organizations.”

That same day, however, Chainalysis published a report  implicitly criticizing the WSJ’s methodology.

“We have seen recent estimates related to the attacks on Israel that appear to include all flows to certain service providers that received some funds associated with terrorism financing,” the report stated. However, it argued that “those totals include funds not explicitly related to terrorism financing.”

In a further blow to the WSJ’s credibility, one of the companies whose data the paper initially cited published its own critique  of the numbers on Wednesday, October 25.

Writing that “there is no evidence to support the assertion that Hamas has received significant volumes of crypto donations,” Elliptic argued that its data had been misrepresented. The firm said it has been in touch with the Journal and Senator Warren to clarify the record and has called for the paper to correct its misinterpretation.

Why Accurate Reporting is Important

Of course, neither Chainalysis nor Eliptic refute the importance of preventing the illicit use of cryptocurrency. However, both firms highlighted the importance of keeping the public well-informed and accurately representing the often complex dynamics involved.

In an increasingly polarized debate over how the US should regulate the crypto sector, AML/CFT rules could be a potential flashpoint, where misinformation threatens to further entrench disagreements and make it harder to achieve consensus.

Moreover, as much as American crypto policy has often infuriated industry stakeholders in recent years, with many calling for Congressional action to create legal clarity, incorrect or misrepresented information should never inform regulation.

After all, away from the emotionally charged issue of Hamas’ crypto fundraising efforts, there are strong arguments in favor of more moderate AML/CFT rules.

For example, last week the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) proposed new rules effectively prohibiting the use of crypto mixers. But privacy advocates swiftly criticized the proposal, who argue against a blanket ban that forbids even legitimate use of the technology. 

In the end, misconstruing the size of the problem isn’t helpful when it comes to creating an AML/CFT regime that is both fair and effective. And in a political climate beset by fake news, only accurate and transparent data should form the basis of American crypto policy.

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