Key Insights:
Amid the ongoing war with Hamas, Israeli authorities claim that stablecoins are being used by several terror and militant groups including Hamas, ISIS and Hezbollah to access funding and launder money.
Several reports also claim that crypto fueled the Hamas's attack and massacre on Israel.
This also raises concerns over the ethical usage of cryptocurrencies which for a long time has been an issue of contention between regulators and Web3 companies like Binance, Tornado Cash and Tron.
ChainArgos, a blockchain analytics firm has reported that the Israeli National Bureau for Counter Terror Financing has alleged that crypto was being heavily used to fund terror activities in its neighborhood. Blockchain technology has been often used in terror activities.
Here is a tweet from ChainArgos depicting the wallets and the amounts transferred by them in an attempt to fund terror groups.
The top account which transferred the most amount was TB2iP6zPR3Z7VAAq8kRnZgsoPP6qa9kjgH. This wallet was active last week and allegedly transacted with Lebanese political party and militant group Hamas. The account is on the Tron blockchain, which is known for its low cost transactions.
Also, several of these transfers were done with Binance wallets. Binance has stepped up co-operation with law authorities against terror financing.
In a move to raise and move funds across borders, it appears that terror groups linked to the attack against Israel, they have switched from Bitcoin and moved to stablecoins due to the latter's ability to launder money via DEXs. Most used cryptocurrency was USDT but there were sufficient amounts of USDC, TUSD, and USDD also involved.
Recently, Elliptic's analysis which was reported by the Wall Street Journal showed that nearly $130 million were transferred to Hamas in the past few weeks.
ChainArgos also reported Israeli intelligence claims, that transfers from these above wallets are deeply interwoven with Amir Capital, an alleged Russian ponzi.
A report by United Nations claim that nearly 20% of terror financing across the world is done through cryptocurrencies.
In June 2023, Israel's defense minister Yoav Gallant announced that his country seized crypto assets worth millions of dollars which were transferred to Hezbollah.
A few days ago on October 11, 2023, Delhi Police in India reported that an amount of ₹4 crore (almost $0.5 million) was stolen from users and sent to Hamas. The claim by Delhi Police was backed by Mossad, Israel's external intelligence agency.
A report by PYMNTS claims that since 2021, Hamas and two other militant groups received almost $41 million through cryptocurrencies.
In a recent move on October 16, 2023, Tether froze close to $873k worth of crypto that was linked to Israeli-Hamas conflict and the Ukraine-Russia war.
The news came from its Twitter page:
Tether's recently appointed CEO Paolo Ardoino, stated that opposed to popular beliefs, crypto transactions are not anonymous and can be easily traced,
He added that Tether was actively working with global law enforcement agencies to track and trace illicit movement of funds and where possible, froze assets linked to illegal activities.
Since, its popularity in the mid-2010s, cryptocurrency has created a bone of contention between law enforcement agencies, regulators, governments, the public and the Web3 companies. While governments and regulators have often highlighted the risk of cryptocurrencies being used for potentially illegal activities, Web3 companies and crypto users have often downplayed the issue.
However, when it appears that the recent attacks on Israel were at least partially funded by crypto, it further complicates the situation of crypto regulations. Authorities will definitely seek stricter regulations and thereby severely limiting the independence of Web3 users.
Already, there have been several cases lodged against Binance, Tornado Cash, Tron Foundation, and several other crypto service providers for not taking sufficient measures on anti-money laundering.
However, despite all turbulence, we hope that crypto regulations finds a middle way of keeping the end user empowered while addressing the issue of money laundering.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.