As per the Financial Times report on Tuesday, over 100 accounts linked with Hamas have been frozen at the request of the Israeli police since the October 7 attack. However, the move aims to stop the Palestinian militant group funding. Moreover, Israeli authorities have sought details on an additional 200 accounts, predominantly hosted on Binance, thereby intensifying their clampdown on terror financing through digital assets.

Growing concerns over crypto’s Role in conflict

Cryptocurrencies have become a focal point during international conflicts, and the current situation is no exception. Hamas, which recently instigated a conflict by storming into Israel, has been receiving funding through various channels, including cryptocurrency donations. Data from forensics firms Elliptic and Tel Aviv-based software company BitOK reveal that Hamas and its affiliate, the Palestinian Islamic Jihad, received approximately $41 million and $93 million in cryptocurrency donations between August 2021 and June 2023.

Besides the established names in crypto, stablecoin issuer Tether also has its hands full. The company reported that it had frozen 32 cryptocurrency addresses linked to terrorism activities in Israel and Ukraine. The company reported that it had frozen 32 cryptocurrency addresses linked to terrorism activities in Israel and Ukraine. Tether is cooperating with Israel’s National Bureau for Counter-Terror Financing (NBCTF) as part of this effort.

The action comes after Binance acknowledged last week that it had blocked a “small number” of accounts in association with Israeli authorities. However, they stopped short of providing an exact count. In a statement, a Binance spokesperson articulated the company’s stance: “The events in the Middle East deeply sadden us. As always, Binance follows internationally recognized sanctions rules, blocking the small number of accounts linked to illicit funds.”

The ongoing cooperation between Binance and Israeli officials demonstrates a significant shift in the struggle against terror financing, particularly in the crypto sphere. While cryptocurrencies can offer anonymity and ease of transaction, they are prone to misuse by malicious entities. Consequently, regulatory bodies and crypto firms are compelled to take stringent actions to mitigate the risks.

However, it should be noted that cryptocurrencies are not the primary funding avenue for Hamas. Ari Redbord, head of legal and government affairs at blockchain intelligence firm TRM Labs, stated, “Crypto is a very small part of Hamas’ fundraising strategy. It’s mostly state-sponsored.” Significantly, even as efforts to block terror financing through cryptocurrencies intensify, the crypto space is still a small fragment of the larger financial landscape fueling these terrorist organizations.

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