After the October 7 Hamas attacks against Israel, the role of cryptocurrencies in the funding of certain organizations has come under greater scrutiny. But media outlets’ tendency to equate “cryptocurrency” with Bitcoin doesn’t necessarily align with what is known about how the group raises money.
What is becoming clear is that Hamas appears to favor the Binance crypto exchange, which has been increasingly implicated in the organization’s crypto fundraising efforts.
In the immediate aftermath of the attacks, Israeli intelligence authorities moved swiftly to shut down Binance accounts linked to Hamas. Now, the Financial Times has reported that over 100 accounts have been closed as part of the ongoing crackdown.
Israeli authorities have also requested information about up to 200 additional crypto accounts, mostly on Binance.
For Binance, the latest round of account closures doesn’t look good in light of outstanding charges that the exchange has failed to implement sufficient counter-terrorist financing controls.
According to a lawsuit brought by the US Commodity Futures Trading Commission (CFTC), Binance “Failed to implement basic compliance procedures designed to prevent and detect terrorist financing.”
Scrutiny of the exchange’s role in funding paramilitary organizations has increased in recent days after the Wall Street Journal reported that the group Palestinian Islamic Jihad had raised as much as $93 million in crypto, much of which was fuelled through Binance accounts.
In response to the revelations, Binance told the paper that it has been working with Israeli law enforcement “around the clock” to support ongoing efforts to combat terror financing.
In April 2023, Arabic news sources reported that Hamas was putting the brakes on its Bitcoin fundraising efforts.
“We announce the cessation of receiving financial donations through the digital currency Bitcoin, in order to ensure the safety of donors and not expose them to any harm,” the group stated.
Explaining its decision, Hamas said there had been an “intensification of persecution” against supporters who used Bitcoin to finance the group. Without naming specific channels, it called for continued donations via alternative means.
But if Hamas isn’t interested in receiving Bitcoin, which cryptocurrencies does the organization prefer?
The Israeli National Bureau for Counter-Terror Financing (NBCTF) has identified hundreds of millions of dollars worth of stablecoin flows into Tron accounts controlled by Hamas, Hezbollah, and other groups.
The majority of the inflows were denominated in USDT, but the agency also reported the use of USDC, TUSD, and USDD transactions.
Crypto has been involved, on both sides, in numerous conflicts in recent times. The borderless nature of these digital assets, as well as some other key factors, make them useful financial tools.
When Russia invaded Ukraine, there were calls from officials involved with the Ukranian government calling for donations in a range of cryptos.
Even Russia was seen to be using cryptos to help fund the invasion.
As a global financial tool, it is likely that these assets will continue to play a part in the Israel conflict as well as others to come.