The blockchain analytics firm Chainalysis has refuted claims made by the Wall Street Journal (WSJ) that Hamas raised tens of millions of dollars in cryptocurrency. According to Chainalysis, the terrorist organization actually raised less than half a million dollars through crypto funding. This contradicts the WSJ's assertion that Hamas and other terror groups were evading US sanctions and funding their operations through crypto.
The WSJ report prompted politicians, including Senator Elizabeth Warren, to express concern over the alleged use of cryptocurrency by terror groups. On October 18, Chainalysis addressed the "inaccurate methodologies" used to estimate crypto's role in terror financing. The company acknowledged that while some terrorist groups do utilize crypto, the majority of terror financing still relies on traditional financial institutions and fiat-based methods, like shell corporations. Chainalysis emphasized that the transparency of blockchain technology makes crypto traceable, making it less ideal for terrorist groups. This traceability allows government agencies to work with private sector firms to identify and seize terrorist funding, a more challenging task in the traditional financial ecosystem.
Chainalysis conducted an analysis of transactions on the recently sanctioned Gaza-based service provider, Buy Cash. The firm found that while the company processed approximately $82 million in crypto transactions, only around $450,000 was transferred to a wallet address linked to a terrorist group.
Market analyst Sam Callahan has called for the WSJ to retract its claims, stating that they are "patently false." Callahan believes that the WSJ report has sparked politicians with an agenda to urge the White House to take action against the crypto industry.
A report from the US Treasury Department titled "National Strategy for Combating Terrorist and Other Illicit Financing" revealed that the majority of terrorist organizations primarily rely on the traditional financial system and cash for fund transfers. Brian Nelson, the Treasury Department's Under Secretary for Terrorism and Financial Intelligence, stated that Hamas is a "uniquely resourced" organization with well-established methods of accessing the formal financial system. In addition to funding from Iran, Hamas generates money through investment portfolios, controlling border crossings, racketeering businesses, and fake charitable organizations.
