Following attacks by Hamas on October 7, Israel has sought to neutralize the group’s ability to raise funds, targeting both individuals and specific payment avenues, including several crypto-based payment channels.
Meanwhile, in the US, the use of such platforms by Hamas has reignited calls for tougher anti-money laundering and counter-terrorism financing (AML/CFT) rules.
On Tuesday, October 17, a bipartisan group of lawmakers led by Senators Elizabeth Warren, Roger Marshall and Representative Sean Casten wrote to the Treasury Department and the White House expressing “grave concern” that Hamas and affiliated groups have used crypto to evade US sanctions.
The letter referred to Hamas as “‘one of the most sophisticated crypto users in the terror-finance domain,” a fact that it said “clarifies the national security threat crypto poses to the US and our allies.”
“Congress and this Administration must take strong action to thoroughly address crypto illicit finance risks before it can be used to finance another tragedy,” the letter added.
Posing several questions about the Administration’s response to crypto fundraising by Hamas and other armed groups in the region, lawmakers have requested answers no later than October 31.
Unsurprisingly, many of the letter’s signatories have previously expressed their support for rules that would curb the illicit use of crypto.
For example, Warren and Marshall co-sponsored the Digital Asset Anti-Money Laundering Act in the Senate. Meanwhile, Senators Jack Reed and Mark Warner also proposed the Crypto Asset National Security Enhancement Act earlier this year.
To advance their regulatory agenda, crypto-skeptic lawmakers have picked up on recent reports that suggest Hamas and associated organizations may have raised hundreds of millions of dollars via cryptocurrency donations.
In their recent letter, US politicians cited figures published in the Wall Street Journal which suggest that Hamas and the Palestinian Islamic Jihad (PIJ) collectively raised over $130 million in crypto between August 2021 and June this year.
Meanwhile, the Israeli National Bureau for Counter-Terror Financing (NBCTF) has identified huge volumes of stablecoin flows into accounts controlled by Hamas, Hezbollah, and other sanctioned entities.
In recent days, Israel and its allies have moved swiftly to cripple Hamas’ ability to collect cryptocurrency donations.
For example, Israeli intelligence agencies have worked with Binance to close over 100 accounts on the platform believed to be controlled by Hamas.
Earlier this week, Tether made an announcement that it had frozen 32 crypto addresses, holding over $873,000 worth of stablecoins connected to illicit activity in Israel and Ukraine.
Finally, on October 18, the US Treasury Department imposed sanctions on the Gaza-based remittance service and cryptocurrency exchange Buy Cash.