Israeli civic-defence groups have been sounding the alarm since January that the militant Palestinian-liberation organization Hamas has started raising funds via Bitcoin.
And while donations of Bitcoins to Hamas so far pale in comparison to the millions of dollars Hamas is believed to receive from Iran, Hamas is nonetheless sophisticating its Bitcoin donations strategies as alternate funding avenues diminish, Reuters reports.
Blockchain forensics firm Elliptic, along with rival companies like Chainalysis, provide software and services to law enforcement and cryptocurrency businesses trying to ensure compliance with anti-money laundering and anti-terrorist finance laws.
According to Reuters, in recent years, Hamas has seen certain real-world sources of revenue decline, a factor that likely contributes to the organization’s thirst for virtual currency donations.
First, according to Reuters:
“Egyptian President Abdel-Fattah Al-Sisi in 2013 closed hundreds of tunnels under the Gaza-Egypt border, preventing the smuggling of weapons and goods from cows to cars, depriving Hamas of tax income.”
Iran also reportedly reduced funding to Hamas after the organization denounced the murder of Sunni Muslims in the Syrian civil war.
Hamas is a designated terrorist organization in the and US and Europe. This means individuals and financial institutions in those jurisdictions may not have financial dealings with it.
Cryptocurrency networks, therefore, which can transmit funds across borders, may become increasingly attractive to sanctioned organizations, as they did in 2012 when Mastercard and PayPal cut off Wikileaks.
Some cryptocurrency networks, like ZCash and Monero, are designed to allow anonymous transactions, though using those networks securely is typically the stuff of specialists.
Bitcoin is far more familiar, and though straight Bitcoin transactions can be traced, there are ways to obscure information about senders and receivers.
When the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned several Bitcoin addresses belonging to two Iranians accused of processing Bitcoins for prolific Iranian ransomware, for example, hardcore crypto advocates laughed because it is easy to generate new addresses.
That is exactly what Hamas is reportedly doing now at the portal where it is welcoming Bitcoin donations.
Still, obtaining Bitcoins tracelessly is becoming more difficult for the average person in increasingly regulated environments like the US, where about half-a-dozen “LocalBitcoins” sellers have lately been jailed for failing to report crypto transactions.
The Shurat Hadin-Israel Law Center’ recently wrote to the American crypto exchange Coinbase to advise them that, “…knowingly providing material support or resources to Hamas is a violation of US federal criminal law…” The Jerusalem Post reported.
According to the Israeli newspaper Globes an Isreali startup called Whitestream has, “detected two donations to Hamas through Coinbase, the largest cryptocurrencies trading platform in the US.”
Constantly modified Bitcoin recipient addresses make flagging suspicious transactions much harder, however.
It would also seem to be the case that such flagging can only be done after the donation has already been received.
Regarding this, Lotem Finkelshtein, head of threat intelligence at Tel Aviv cybersecurity firm Check Point Technologies told Reuters:
“It makes it difficult for such funds to be tracked by financial authorities…It’s not so simple to link wallets to organizations.”
Elliptic claims that only $7400 USD in bitcoins has been so far been transmitted to Hamas in this campaign.
The raise, however, demonstrates that crypto channels may become increasingly important lifelines for sanctioned and illicit organizations.