In their arsenal of modern warfare, Hamas uses rockets, drones, and even paragliders. In the digital sphere, they leveraged mobile phones and internet connections to broadcast their actions globally. But, the burning question is, where did the money for all this come from?

Cryptocurrency. Yes, you heard it right. The darling of the decentralized financial world, crypto, has a dark side, too. It's not just a tool for rebellious libertarians or tech-savvy traders; it's also the secret weapon of militant groups.

Huge Seizures

In August 2020, the US government managed to seize millions of dollars from a number of groups that had been using crypto to fund their activities. But, here's the shocker: Palestinian Islamic Jihad, one of the groups responsible for seizing Israeli hostages, still managed to collect a staggering $93 million worth of cryptocurrency between June 2021 and August 2023, according to the WSJ. Hamas, the heavyweight of Palestinian groups, also raked in around $41 million in digital payments .

Now, we're not entirely sure how much they’ve got, but here's a little insight: in 2022, US authorities slapped sanctions on Hamas' investment office, which reportedly had assets totaling $500 million. And, here's a staggering figure to chew on — the UN estimates that crypto accounts for a whopping 20% of global terror funding.

Calls for Donations since at Least 2019

Hamas affiliates, including its notorious military wing, the Al-Qassam Brigades, have been openly asking for Bitcoin donations since at least 2019. But, here's the kicker: these groups are not choosy. They've dabbled in various currencies, from dogecoin, which Elon Musk casually tweets about, to stablecoins like Tether and USDC, tied to the mighty US dollar. Amazingly, these calls were still happening even as the militants attacked. Israel Police's Lahav 433 cyber unit was working with Binance to lock down accounts linked to Hamas and to transfer the funds to the state. Since 2021, the authorities have confiscated 189 crypto accounts tied to Palestinian militant groups on Binance.

In a report from August 2023, Elliptic, a watchdog for crypto compliance, even mentioned that wallets it was keeping tabs on indicated that these terror groups were investing in DeFi protocols and making money using Solana, the crypto superstar backed by FTX's Sam Bankman-Fried.

How Does This Happen?

Now, you might wonder how these organizations manage to get their hands on crypto when they can't exactly stroll into the New York Stock Exchange. The answer? Smart contracts that conveniently sidestep those pesky "know-your-customer" (KYC) checks. According to Elliptic, some of these groups are even into crypto mining, which is essentially profiting from the nuts and bolts of cryptocurrency networks.

To counter this, Israeli and US officials have been trying to rope in crypto exchanges like Binance to block access for users tied to these groups. They're focusing their efforts on the Financial Action Task Force (FATF), a global body setting the rules to prevent money laundering. The FATF still lists dozens of countries on its "grey list", meaning they haven't met these standards. And, it includes names like Jordan, Syria, and the United Arab Emirates.