The United States and Israel are intensifying efforts to curtail cryptocurrency transfers to Hamas following the group’s large-scale attacks on Israel earlier this month. Coins like Bitcoin, Dogecoin, and Ethereum are often implicated as funding streams for Islamist organizations.
The use of digital currencies and crypto exchange platforms to finance Islamist extremism has come under increasing scrutiny after the Oct. 7 attacks by Hamas, France 24 reported.
On Oct. 19, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) proposed new regulations to classify “Convertible Virtual Currency Mixing” (CVC mixing) as a primary money laundering concern to combat its use by malicious actors, including Hamas.
“Mixers” or “tumblers” blend cryptocurrency of illicit origin with other funds, increasing the risk of using crypto mixers for money laundering or concealing earnings, according to the crypto industry news site Cointelegraph.
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Post the Oct. 7 attack, the Israeli defense ministry claimed to have seized virtual wallets linked to Hamas that received $41 million between 2019 and 2023. The Palestinian Islamic Jihad group reportedly raised $94 million in cryptocurrency over recent years, as per British firm Elliptic.
On Oct. 18, Washington sanctioned “Buy Cash,” a Gaza-based company, for allegedly facilitating cryptocurrency transfers to Hamas and the Palestinian Islamic Jihad.
Despite these revelations, experts like Tom Keatinge, director of the Centre for Financial Crime Research and Security Studies at the Royal United Service Institute, caution against overhyping cryptocurrency’s role in funding extremism. Most of Hamas’ budget, estimated at nearly $1 billion, comes from “expatriates or private donors in the Gulf region,” as per Deutsche Welle.
In this respect, the $41 million in cryptocurrencies seized by the Israeli authorities may seem like a drop in the bucket for Hamas, as per the report.
Nevertheless, crypto has become a more prominent funding method due to its ease and speed of transactions. The rising crackdown on traditional terrorist financing channels has led these groups to explore new ways of raising money, such as cryptocurrencies.
Cryptocurrencies such as Bitcoin BTC/USD, Dogecoin DOGE/USD, and Ethereum ETH/USD are increasingly accused of facilitating funding for Islamist groups. Hamas’ use of crypto was first revealed in January 2019. Initially, these “funding 2.0” initiatives raised only a few thousand dollars. However, Hamas has increasingly used social media networks as funding channels ever since.
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