U.S. adds Hamas sanctions as crypto industry fights back against funding claims

“Today’s action underscores the United States’ commitment to dismantling Hamas’ funding networks by deploying our counterterrorism sanctions authorities and working with our global partners to deny Hamas the ability to exploit the international financial system,” said Deputy Treasury Secretary Wally Adeyemo.

Adeyemo also addressed U.S. allies during a speech in London Friday, calling for greater cooperation with the United Kingdom and other allies to disrupt terror finance networks, with a specific emphasis on cryptocurrency and digital assets.

He said that the “vast majority” of crypto companies “want to help us root out terrorist financing,” but added that there are “those in the digital asset space who wish to innovate without regard to consequences.”

Adeyemo could be referring to the world’s largest digital asset exchange, Binance, and the most popular stablecoin, Tether
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which have come under scrutiny even by cryptocurrency boosters in Washington.

Sen. Cynthia Lummis of Wyoming and Rep. French Hill of Arkansas, both Republicans, on Thursday wrote a letter to Attorney General Merrick Garland calling on the Department of Justice to “take swift action…against Binance and Tether to choke off sources of funding to terrorists currently targeting Israel.”

Lummis, who first bought bitcoin
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in 2013 and has been one of crypto’s strongest supporters in the Senate, cited an article published in the Wall Street Journal earlier this month that said that Hamas and its allies had received $130 million in crypto between August 2021 and June of this year.

The article was also cited in a a letter written by Democratic Sen. Elizabeth Warren of Massachusetts and Republican Sen. Roger Marshall of Kansas and signed by more than 100 lawmakers earlier this month demanding the Biden administration “address crypto-financed terrorism.”

The Wall Street Journal, however, corrected the article after widespread criticism from the crypto industry, including analytics firm Elliptic, whose data served as the basis for the article.

The Wall Street Journal and MarketWatch share common ownership.

“There is no evidence to suggest that crypto fundraising has raised anything close to that amount,” Elliptic said in a blog post published Wednesday.

Elliptic said the discrepancy is due to the fact that the crypto wallets that have been identified as linked to Hamas are likely not controlled by the group. They are instead likely owned by money transmission businesses that count Hamas as a client, and that most of crypto that passed through those wallets wasn’t used to fund Hamas.

“No public crypto fundraising campaign by a terrorist group has received significant levels of donations, relative to other funding sources,” Elliptic said.

Experts in the terrorism finance space agree that crypto remains a small part of Hamas’ fundraising toolkit.

“Crypto is currently a very small part of the puzzle,” said Shlomit Wagman, former director general of the Israel Money Laundering and Terrorism Financing Prohibition Authority, at a Senate Banking Committee hearing Thursday. “The major funding channels are, were, and remain state funding. Iran and others — those are the major players.”