Hamas Doesn't Want Bitcoin But Laps Up Crypto Donations Anyway

We're entering the sixth day of brutality in the Middle East. The death toll has surpassed 1,000 - the majority comprising of civilians. In what is being regarded as the "worst atrocities since the Holocaust," Hamas's unexpected assault on Israel has ignited a regional conflict of unprecedented proportions with no end in sight.

Sympathisers of both sides have shown their support through cryptocurrency donations, demonstrating the asset's versatility at times of turmoil.

On Monday, Crypto Aid Israel was launched to channel crypto funds to Israeli victims. Backed by crypto platforms including Cryptojungle, Collider Ventures, 42studio, and Marketacross, the fundraiser's goal is to "raise desperately needed funds for displaced citizens whose unbearable situation demands humanitarian aid."

Over a dozen cryptocurrencies including Bitcoin, Ethereum, USDT and USDC are being accepted. Fireblocks is managing the multi-signature wallet used for the coins in collaboration with Israeli banks. Israeli nonprofits will oversee the allocation of these funds

Hamas reportedly received $41 million in cryptocurrency between August 2021 and June 2023, ahead of its attack on Israel. Palestinian Islamic Jihad also received $93 million during the same period.

The donations were received despite Hamas declaring in April that it would stop fundraising via Bitcoin. "This comes out of concern about the safety of donors and to spare them any harm," the group stated, adding that it will prevent people from donating.

Gaza economist Mohammad Abu Jayyab said Hamas's decision comes from a fear that Israel could reveal donors' identities or access their wallets. "They may also have preferred to go back to old traditional methods or maybe they figured out more advanced ones," he said.

Hamas previously sought donations actively in crypto. Its military wing, the al-Qassam Brigades, asked supporters on Telegram to donate Bitcoin in 2019. “The reality of jihad is the expenditure of effort and energy, and money is the backbone of war,” the group wrote in a post, sharing a wallet address that received about $30,000 in Bitcoin that year.

Tether (USDT) is the most popular cryptocurrency used by Hamas for transactions. The company said it is committed to deterring terrorist involvement and has frozen such wallets whilst working with global law enforcement.

Using crypto is “much easier than smuggling cash over Egypt’s border,” said Matthew Price, a former IRS investigator who now works as a strategic engagement lead at Elliptic.

Israel has made efforts to freeze cryptocurrency accounts used to donate to Hamas. "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," a police statement said.

Working with Binance, the Police Cyber Unit and the Ministry of Defense are locating and freezing accounts on the crypto exchange. The cyber branch of the Israel Police’s Lahav 433 unit, also known as the “Israeli FBI,” is leading the initiative.

"Over the past few days our team has been working in real-time, around the clock, to support ongoing efforts to combat terror financing," a Binance spokesperson said.

"The data we use to pinpoint individuals, addresses, and infrastructures associated with specific organisations stems from intelligence provided by law enforcement and investigative tools we, and our partners, have developed."

However, crypto is not Hamas's main source of money. Iran is the group's largest funder, sending around $100 million per year.

“Crypto is a very small part of Hamas’ fundraising strategy. It’s mostly state-sponsored,” said Ari Redbord, head of legal and government affairs of blockchain intelligence firm TRM Labs. “There’s a focus on it because you are trying to cut off financing by any means. But it’s a relatively small part of the picture.”

Rebdord also said Hamas is one of the most sophisticated crypto users in terror-finances.

Blockchain technology promises unrestricted access for all, detached from state intervention. Perhaps that's not always a good thing.

Elsewhere,

• Crypto Firm Co-Founder in Singapore Charged with Fraud: A co-founder of a cryptocurrency firm Frontier Digital Asset Management has been charged with a series of offenses. The 26-year-old Lek Tai Yong is facing allegations of misappropriating S$270,400 from investors. Furthermore, it's reported that he filed a false robbery report in an attempt to cover up the alleged financial misconduct. If found guilty of lodging a false police report, Lek faces a jail term of up to two years, a fine or both. He also faces seven years in jail, a fine or both if convicted of criminal breach of trust.
• Qatar Consults on Digital Assets Legislative Framework: Qatar is actively seeking public input and consultation as it embarks on the journey to establish a comprehensive legislative framework for digital assets. The move signifies Qatar's commitment to nurturing innovation in the cryptocurrency space while maintaining a keen focus on regulatory oversight. This initiative aligns with the global trend of governments and financial authorities seeking to strike a balance between fostering technological advancements and ensuring responsible governance within the digital asset ecosystem.
• Coins.ph, Circle Collaborate for Financial Inclusion in the Philippines: Coins.ph, a prominent digital wallet service in the Philippines with 18 million users, has forged a strategic partnership with Circle to enhance financial inclusion within the country by driving awareness of USDC-denominated remittances as a secure, low-cost and near-instant solution for international money transfers. The move reflects the growing role of blockchain solutions in enhancing financial access and services, particularly in emerging markets like the Philippines. This partnership holds the promise of bringing greater financial empowerment to individuals in the region.
• JP Morgan Introduces Tokenized BlackRock Shares as Collateral: JP Morgan has taken a significant step in the realm of tokenized assets by launching tokenized BlackRock shares, which can be used as collateral, in partnership with Barclays. This development represents a significant intersection of traditional finance and the blockchain space. These tokenized shares can potentially enhance liquidity and unlock new opportunities in the financial markets, the firm said. The move also highlights the evolving landscape of digital assets and their integration into traditional financial systems, marking a noteworthy development in the ongoing blockchain revolution.