The U.S. government is implementing stricter trade restrictions on Hamas-related entities, prompted by Congress urging the Biden administration to address the terrorist group’s sources of funding through cryptocurrencies. Over 100 senators have petitioned U.S. Treasury and White House officials, expressing concern over Hamas’ exploitation of blockchain-based currency and seeking clarification on the government’s planned actions.
Hamas and Palestinian Islamic Jihad’s Crypto Funding
According to senators, both Hamas and Palestinian Islamic Jihad (PIJ) have collectively raised over $130 million in cryptocurrency and have facilitated transfers worth millions between each other. However, some crypto industry analysts believe this figure is exaggerated.
“Congress and this Administration must take strong action to thoroughly address crypto illicit finance risks before it can be used to finance another tragedy,”
The senators emphasized the need for the administration’s estimates regarding the amount of cryptocurrency held by both organizations and the identification of actors facilitating such token transfers. Senator Elizabeth Warren, a long-time crypto critic, was among the main supporters of the letter. She has repeatedly expressed concerns about the potential violation of sanctions through the use of cryptocurrencies.
Treasury Department’s Response
Following the letter from senators, the Treasury Department proposed new reporting requirements for financial institutions involved with cryptocurrency mixers. These entities obscure the trail of funds on the blockchain. While such mixers are often used for privacy reasons, they have gained a notorious reputation for enabling criminals and sanctioned entities to evade supervision and more easily convert their funds to cash.
“More broadly, the Treasury Department is aggressively combating illicit use of all aspects of the [crypto-mixing] ecosystem by terrorist groups, including Hamas and Palestinian Islamic Jihad,”
Wally Adeyemo, the Deputy Secretary of the Treasury, affirmed the department’s commitment to combating illicit crypto activities. The Financial Crimes Enforcement Network (FinCEN) is also urging institutions to report transactions related to crypto mixers outside of U.S. jurisdiction if they have suspicions about their connection to illicit activities.
“Just as with our efforts in the traditional financial system, [the] Treasury will work to identify and root out the illicit use and abuse of the [crypto-mixing] ecosystem,”
Andrea Gacki, the director of FinCEN, reiterated the Treasury’s determination to counter the misuse of the crypto-mixing ecosystem. In the past, the Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned mixers like Blender.io and Tornado Cash for their alleged involvement in assisting North Korean hackers in laundering over $7 billion in digital assets. Recently, the Treasury also imposed sanctions on a Gaza-based Bitcoin exchange and its operator for previously supporting individuals linked to ISIS.
