Israel-Gaza War: How Hamas Has Used Crypto? An Explainer

The attack by Hamas on Israeli territory over the weekend shocked the entire world and also raised a question: How did the group finance the entire operation? The answer is: Cryptocurrency. Citing Israeli government data and blockchain analytics report, the Wall Street Journal (WSJ) said that three groups - Hamas, Palestinian Islamic Jihad (PIJ) and Hezbollah - received large sums of money through crypto. The government has frozen cryptocurrency accounts used to solicit such donations, the outlet further said in its report.

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Crypto researcher Elliptic said PIJ received $93 million in crypto between August 2021 and June this year. Another firm BitOK said wallets linked to Hamas received about $41 million in the similar time period.

All three groups haven't responded to the latest developments.

WSJ said that US has designated Hamas, the PIJ and Hezbollah as foreign terrorist organisations leading to sanctions by the Treasury Department that limited their access to the international banking system. So, they chose unregulated cryptocurrency to receive funds.

However, it couldn't be determined whether the amount they received was directly used the finance Saturday's assault. The exact amount seized from crypto wallets is also not clear.

Israeli police said the motive behind freezing crypto accounts is the stop the flow of money that Hamas raises through social media campaigns.

"According to suspicions, with the outbreak of the war, Hamas' terrorist organisation initiated a fundraising campaign on social networks, urging the public to deposit cryptocurrencies into their accounts," the police said in a statement, according to news agency Reuters.

"The Police Cyber Unit and Ministry of Defense immediately took action to locate and freeze these accounts, with the assistance of the Binance crypto exchange, in order to divert the funds to the state treasury."

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The statement did not give further details of how many accounts were frozen, nor the value of crypto seized.

Crypto allows users to bypass banks by instantly transferring tokens between digital wallets, which are normally held at a cryptocurrency exchange.

For transactions, Hamas and other groups primarily used the stablecoin tether, which is pegged to the US dollar, avoiding the volatility that affects other tokens, said WSJ. When asked about the use of its tokens, Tether said it remains committed to deterring terrorist involvement, including by freezing related wallets.