Elizabeth Warren, the Massachusetts Senator, is once again targeting cryptocurrency. While the mainstream media, including Germany’s Deutsche Welle, sensationalizes headlines about how cryptocurrency fueled Hamas’ terrorist attack, Warren is using this incident to further her own campaign against digital currencies.
The role of cryptocurrency in the conflict came to light on October 10th when Israeli police froze crypto accounts that were being used for donations to Hamas. This wasn’t the first time this had happened. In 2021, Israel’s NBCTF seized crypto wallets that were linked to a Hamas fundraising campaign.
While Binance collaborated closely with international counter-terrorism authorities during these seizures, Warren and more than 100 US lawmakers sent a letter to the Biden administration urging them to crack down on Hamas and its affiliates’ cryptocurrency wallets. However, it is worth noting that Hamas struggles to raise significant amounts of crypto as part of its fundraising efforts.
The letter from lawmakers also requested the Biden administration to provide estimates on the value of crypto assets remaining in Hamas-controlled wallets, the extent to which Hamas’ operations are funded through crypto, and any information on the actors facilitating the sending of crypto to and from Hamas and other militant groups.
On October 18th, the US Treasury Department sanctioned the Gaza-based crypto broker “Buy Cash Money and Money Transfer Company (Buy Cash)” after it was used for a $2,000 Bitcoin transaction. However, this amount is insignificant compared to the hundreds of millions of dollars used to fund Hamas. One of the sanctioned wallets had only $16 in it.
The use of cryptocurrency by terrorists has been greatly exaggerated. Money launderers still primarily rely on the US dollar, with crypto playing a relatively minor role. It is questionable why terrorists would choose to use blockchain when its transactions can be traced. Additionally, terrorists have alternative ways of obtaining funds, such as diverting aid money from the international community. For instance, the United Nations has spent billions in Gaza, including $600 million in 2020, while Hamas reportedly repurposed European Union-funded water pipelines into rockets.
A recent report by blockchain-analysis provider Elliptic suggested that Hamas did receive cryptocurrency around the time of the attack. However, crypto is not Hamas’ main source of funding. Instead, they predominantly use the banking system, money service businesses, and informal “hawala” transfers. These transfers are part of a global financing network that funnels funds from charities and friendly nations to Hamas. While Hamas began publicly seeking crypto funds in 2019, it now employs payment processors to create crypto addresses and conceal its cryptocurrency wallets.
It is clear that the bulk of anti-terrorism efforts should not be solely focused on terrorist use of cryptocurrency. These organizations employ diverse methods to obtain funds, and they are constantly adapting. According to former CIA analyst Yaya Fanusie, stopping them is a constant game of cat-and-mouse.
Due to the transparent nature of crypto transactions, it is evident when Hamas uses cryptocurrency, as demonstrated by the recent freezing of crypto assets. When they do use crypto, Hamas primarily receives small-dollar donations, which only make up a fraction of their substantial $300 million annual budget. It is disingenuous to claim that the terrorist use of crypto poses a significant threat compared to the fiat-denominated funds flowing through these organizations.
Warren’s crusade against crypto seems to be a distraction from more important discussions about how terrorist organizations actually raise funds through traditional financial systems.
Kadan Stadelmann, the Chief Technology Officer of the Komodo Platform and a blockchain developer, graduated from the University of Vienna in 2011 with a degree in information technology. He later attended the Berlin Institute of Technology, where he studied technical informatics and scientific computing. Stadelmann joined the Komodo team in 2016.
Please note that this article is for informational purposes only and should not be considered legal or investment advice. The opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.