Are cryptocurrencies funding terrorism?

Wednesday, October 18, 2023

Since the Hamas attack on Israel, cryptocurrencies have once again been accused of funding terrorism. But contrary to what many people think, their impact, while real, remains very negligible, not least because the blockchain makes it possible to trace all transactions...

How does Hamas finance itself?

Since the terrorist attack on Israel on 7 October, this is the question that comes up again and again, in restaurants or at the coffee machine ☕️, and one of the means most cited are the... cryptocurrencies.

A lot of articles have been written on the subject. There have also been plenty of comments from more or less well-informed experts. But there's no point beating around the bush, YES, cryptocurrencies can be used to fund terrorism, and Hamas, like other organisations (Daesh, for example), has taken advantage of this.

🗓️ As early as 2019, the terrorist organisation recovered money in cryptocurrencies.

It initially recovered a few thousand dollars, mainly via digital wallets. Then, thanks to the sharp rise in the markets, the amounts rose sharply. By the summer of 2021, Hamas had recovered $7 million!"

Thereafter, the terrorist organisation continued to collect funds, more via accounts on exchange platforms, such as Binance. According to the American company Elliptic, Hamas thus recovered $93 million between 2021 and 2023 💸.

Just, anyway, to give a bit of perspective, since 2018, Qatar has given $30 million a month to Hamas, totalling more than $1.5 billion. So the amounts in crypto remain, whatever happens modest....

Once we've said that, we should also add two things:

👉 Hamas has not been raising money in cryptos since April 2023

The organisation itself has asked its supporters to stop making crypto transfers (the graph below shows this very well) because, as many have forgotten, blockchain is not the most suitable technology for fraud 🙃.

On the blockchain, transactions are recorded and public, so can be viewed by anyone. It is possible to trace the digital wallet of someone who has sent funds. Not necessarily very practical!

👉 Hamas has only recovered part of its cryptos

Also, to recover the money in local currency, you have to go through an exchange platform at some point. However, most of these platforms now have Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures for users, making it even more difficult to recover the funds.

In addition to these difficulties, Hamas has had many of its accounts frozen. As early as 2020, Israel and the United States succeeded in blocking accounts held by the Palestinian organisation on platforms.

In recent days, account freezes on platforms have multiplied. In collaboration with the Israeli authorities, Binance has frozen around a hundred accounts linked to Hamas.

This week, the company Tether, which manages the stablecoin dollar USDT (a dollar-indexed cryptocurrency), for its part announced the freezing of 32 digital wallets containing cryptocurrencies. Some of these wallets are said to be linked to Hamas.

Conclusion: while cryptocurrencies do indeed enable terrorism to be funded, they are not an effective way of evading sanctions...

This analysis is not investment advice. It has been prepared without taking into account your personal situation, particularly your financial situation, risk profile, and investment objectives.

Before investing in any product, investors should fully understand the risks involved and consult their own legal, tax, financial, and accounting advisors.

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