This article has been republished with permission from Binance News.
According to CoinDesk, blockchain analytics firm Chainalysis has stated that reports of tens of millions of dollars in cryptocurrency funding Palestinian operations in Israel are likely overstated. In a blog post, the company argued that the flows of crypto financing to Hamas and affiliated groups have become inflated far beyond reality. Chainalysis emphasized the importance of understanding how such funding actually works to avoid misconceptions.
Last week, the Wall Street Journal reported that Palestinian Islamic Jihad received $93 million in crypto between August 2021 and June 2023, while Hamas received about $41 million in the same timeframe. Critics of the report argued that it was not clear whether the funds were actually reaching terrorists and that crypto financing was small compared to state-funded support, particularly from Iran.
Hamas announced in April that it was suspending crypto fundraising due to the risk it posed to its collaborators. Chainalysis highlighted the transparency of blockchains as a disadvantage for actors attempting to operate secretly, stating that cryptocurrency is not an effective solution to finance terrorism at scale.
The debate around crypto financing of terrorism is relevant to ongoing policy discussions in the U.S. regarding money laundering controls. Senators Elizabeth Warren and Roger Marshall cited the Wall Street Journal’s reporting on Hamas financing in an op-ed, both being sponsors of the Digital Asset Anti-Money Laundering Act, which aims to increase reporting requirements on crypto transactions to combat money laundering.
Chainalysis claimed that the inflated estimates cited by the Wall Street Journal likely count all flows going to service providers suspected of involvement in terror financing, but this does not necessarily mean the funds reached wallets controlled by terrorists. The company is currently working to produce more accurate estimates for crypto flows to groups behind the Israel attack.