During the year leading up to the attacks, three militant groups—Hamas, Palestinian Islamic Jihad and their Lebanese ally Hezbollah—received large amounts of funds through crypto, according to a review of Israeli government seizure orders and blockchain analytics reports.
Digital-currency wallets that Israeli authorities linked to the PIJ received as much as $93 million in crypto between August 2021 and June this year, analysis by leading crypto researcher Elliptic showed.
Wallets connected to Hamas received about $41 million over a similar time period, according to research by another crypto analytics and software firm, Tel Aviv-based BitOK.
Militants from the PIJ joined Hamas on Saturday in storming into Israel from the Gaza Strip, killing some 900 civilians and abducting at least a hundred more. At least 700 Palestinians have died since Israel retaliated with a wave of attacks on Gaza.
Hamas’s armed wing, the Izz ad-Din al-Qassam Brigades, didn’t respond to a request for comment on the groups’ use of crypto. The PIJ and Hezbollah couldn’t be reached for comment.
All three militant groups have been designated foreign terrorist organizations by the U.S. government and are subject to sanctions by the Treasury Department, limiting their access to the international banking system. Anyone found transacting with those entities risk criminal prosecution and being targeted with sanctions themselves.
It couldn’t be determined whether the crypto they received was directly used to finance the assault. It also couldn’t be determined how much crypto Israeli authorities seized from the wallets. Researchers said that would likely have been a small percentage of the overall amount of funds that flowed through them.
Israeli police said Tuesday that they froze further crypto accounts used by Hamas to solicit donations on social networks, part of a continuing effort to locate the “financial infrastructure in cryptocurrencies used by terror entities to fund their activities.”
Crypto allows users to bypass banks by instantly transferring tokens between digital wallets, which are normally held at a cryptocurrency exchange. The U.S. Treasury Department, in a report last year, said gaps in financial crime controls at such crypto exchanges can allow terrorist groups to misuse them, noting Islamic State and al Qaeda had both received donations in crypto, too.
After an operation in June to seize crypto belonging to Hezbollah, Israeli Defense Minister Yoav Gallant said the use of digital currencies was making the job of stopping terrorist financing ever more complex.
In an order the following month against the PIJ wallets, Israel’s National Bureau for Counter-Terror Financing also requested the seizure of any crypto held on
67 client accounts at Binance, the world’s largest crypto exchange. Earlier orders this year by the bureau against Hamas and Hezbollah also sought to confiscate funds at Binance. The U.S. Justice Department has been conducting a broad investigation into the company’s anti-money-laundering controls, the Journal has reported.
A Binance spokesperson said the exchange actively partners with law enforcement agencies, including those in Israel, to combat terror financing.
Hamas has publicly sought to raise funds in crypto since at least 2019, when the al-Qassam Brigades began asking supporters on its Telegram channel to donate bitcoin. “The reality of jihad is the expenditure of effort and energy, and money is the backbone of war,” the group wrote in a post, attaching a wallet address that received about $30,000 in bitcoin that year.