Israeli police seized crypto accounts used by Hamas to collect donations on social media, the police said Tuesday morning.
Even as industry executives note that fund transfers on most blockchains are easy to track, its alleged use by the militant group is likely to ramp up calls to impose stiffer anticrime requirements on crypto exchanges.
According to a local report on Tuesday, the Israeli police’s Lahav 433 cyber unit and other agencies identified social-media accounts calling for donations to accounts at crypto trading platform Binance to support Hamas’ war against Israel. In a statement, the police said they worked with Binance to freeze the accounts and transfer the funds to the state treasury.
The cyber unit also froze a bank account that the group had posted to receive donations, the report said.
“Over the past few days our team has been working in real time, around the clock to support ongoing efforts to combat terror financing,” Binance said in an email to Barron’s. “We are committed to ensuring the safety and security not just of the blockchain ecosystem, but also the global community, through our proactive work.”
Crypto companies for years have tried to fight the perception that the token market mostly enables payments by fraudsters, terrorists and other criminals, and the latest connection to Hamas is sure to increase calls for more industry oversight.
“Some in Congress think crypto is solely for facilitating illicit activity,” wrote Blockchain Association director of government relations Ron Hammond on X, the platform formerly called Twitter.
Hammond said the connections could lead to more pressure in favor of bills like one authored by Sen. Elizabeth Warren (D., Mass.) and Sen. Roger Marshall (R., Kan.). That bill, which has other Republican and Democratic co-sponsors, would toughen anti-money-laundering and know-your-customer requirements for crypto firms and increase the types of firms that the rules apply to.
“Reports that Hamas funded its attack on Israel using crypto will make it politically difficult to block this bill, which could be attached to an Israeli aid package or to a lame duck omnibus,” wrote TD Cowen analyst Jaret Seiberg in a research note on Tuesday.
The seizures announced Monday aren’t Binance’s first connection to Hamas. The Commodity Futures Trading Commission in March sued Binance and founder Changpeng Zhao, accusing the firm of operating as an illegal digital asset derivatives exchange. The lawsuit said that in a conversation with a colleague, Binance’s then compliance chief acknowledged that Hamas used the company to send funds in small sums to avoid money laundering controls.
Binance at the time the case was filed called the complaint “unexpected and disappointing” and this summer moved to dismiss the case.
In 2020, the U.S. seized $2 million in crypto connected to Hamas and terrorist organizations. Hamas earlier this year said it would stop taking Bitcoin donations, citing “hostile” actions against donors.
Crypto has long been a favorite currency for hackers and other criminals for its ability to quickly be transferred pseudonymously without touching the banking system and its law-enforcement-related checks.
Crypto transactions are typically recorded on a public ledger called a “blockchain.” That makes it easy to see movements between digital wallets, though it isn’t always known what people or organizations own them. Firms including Chainalysis have made a big business in helping enforcement agencies track crypto transfers.
Crypto executives have argued that attempts to impose banklike surveillance requirements on blockchain firms are in many cases expensive or unworkable. But in light of the Middle East strife, a crackdown is likely coming, anyway.
Write to Joe Light at [email protected]
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