In a bid to circumvent traditional financial oversight, Hamas has increasingly turned to crypto for fund transfers, according to a new Wall Street Journal report.
The move by Hamas to turn to crypto followed an air strike by Israel in mid-2019 that targeted a Hamas commander, described as Iran’s financial conduit in Gaza, and disrupted the organization’s largely cash-based and off-the-books remittance system, the Wall Street Journal report said.
The replacement for the slain commander, Zuhair Shamlakh, reportedly brought with him a more modern financial strategy, choosing instead to use cryptocurrencies like Bitcoin (BTC) and Tether (USDT) to settle financial balances.
The shift allowed Hamas and its affiliates, like Palestinian Islamic Jihad, to receive large sums from Iran in the two years leading up to the October attacks on Israel, the Wall Street Journal quoted Israeli law-enforcement officials as saying.
To counter this new trend, Israel’s National Bureau for Counter-Terror Financing (NBCTF) has issued seven orders since 2021 to seize crypto held by Gaza-based money exchanges with alleged links to Hamas.
According to the NBCTF, crypto wallets associated with these exchanges received significant amounts, with $41 million traced to two orders connected to Gazan currency exchanges, and an additional $93 million linked to Palestinian Islamic Jihad.
Crypto-funding crucial for Hamas since 2020
While Hamas’s initial move into crypto involved small-scale donations from supporters, it had by 2020 grown to become a crucial method for large-scale transfers within hawala networks, according to the Israeli officials the Wall Street Journal spoke with.
Hawala is an informal trust-based money transfer system based on cash that relies on agents working around the world, and the system is popular in areas where banks are expensive or unreliable.
Half the exchanges’ money was for Hamas
The Wall Street Journal report sheds light on the complex financial web involving Gazan exchanges, highlighting their use of crypto to receive funding from Iran, a country that is known as a backer of Hamas.
Notably, several exchanges were also engaged in legitimate activities like international money transfers, trade payments, and remittances to mask the financing of Islamist groups, but as much as half of the money flowing through these exchanges was believed to be directed to Hamas.