Following the events in Israel, mainstream media has pointed out the alleged connection between Bitcoin and crypto with Hamas. The terrorist group has been using digital assets to raise money globally, but the situation is complex and sheds light on the indirect use cases of cryptocurrencies.
Bitcoin Not A Tool, But A Weapon Against Terrorists?
Via social media platform X, Sam Lyman, Director of Public Policy for Bitcoin mining company Riot, addressed the recent reports on the connection between Hamas and crypto donations. As mentioned, the group supposedly raised over $100 million in donations using digital assets.
Mainstream media has been reporting on these donations from the perspective of digital assets, enabling groups like Hamas to maintain a financial lifeline. A report from The Wall Street Journal claims that the events of last Sunday, when members of Hamas infiltrated Israel, resulting in the death of hundreds of civilians, were financed with crypto.
Lyman claims that the reports lacked certain nuances that point at Bitcoin and cryptocurrencies not as a tool but as a potential obstacle for terrorist groups. Hamas instructed their followers to refrain from donating money in Bitcoin. Lyman explained:
Why? Because the transparent nature of the blockchain had Western intelligence following their every transaction like bloodhounds. Hence, the sudden drop on the chart. There’s a reason money laundering via Bitcoin has been called a “classically dumb crime.” It shines a spotlight on everyone involved. Remember this as the usual suspects ramp up their anti-crypto rhetoric in the weeks to come.
As seen in the chart below, the terrorist group has been experiencing a decline in its crypto donations since late 2022 and early 2023. Bitcoin was the primary cryptocurrency used for this objective, and law enforcement agencies had an easy job tracking them down.
Hamas Prefers Fiat Over Crypto
The most recent attack on Israel has only increased cooperation between local law enforcement agencies and crypto companies. These entities allowed Israeli police to freeze those accounts associated with Hamas and their crypto, potentially inflicting a heavy blow on the terrorist group.
In a separate report from Reuters, posted when Hamas halted their Bitcoin transactions, the terrorist group stated: “This comes out of concern about the safety of donors and to spare them any harm.” The statement highlights the potential for Bitcoin and crypto to aid law enforcement agencies and suffocate similar illegal activities.
Moreover, economist Mohammad Abu Jayyab told Reuters that the terrorist group is likely more inclined to use fiat currencies and traditional payment rails to fund their operations. The expert said: “They may also have preferred to go back to old traditional methods, or maybe they figured out more advanced ones.”
As of this writing, Bitcoin trades at $26,750, with a 2% loss in the last 24 hours.
Cover image from Unsplash, chart from Tradingview