According to the most conservative estimates, since the terrorist organization Hamas took control of the Gaza Strip in 2007 it has raised hundreds of millions of dollars for its military projects. Some of this money flowed through open channels, primarily the cash-filled suitcases that arrived from Qatar – with the knowledge and approval of the Israeli government. The money was earmarked for the “rehabilitation of Gaza,” but eventually ended up in Hamas’ coffers. There were also clandestine transfers of money, including huge sums that were collected as donations, as well as money from Iran, which were transferred to the terror organization through various cryptocurrency platforms.

Like other security organizations across the world, Israel was aware that terrorist organizations were using cryptocurrency, but by the time it started to take action to prevent it, it was too little and too late – especially once the organization had converted the cryptocurrency into cash.

Bulging Cryptocurrency Wallets

Hamas first started to ask its supporters to donate via cryptocurrency in January 2019. It is impossible to discover exactly how much it raised at that point, but there is evidence that, two and half years later, in the summer of 2021, while Operation Guardians of the Wall was being waged, Hamas’ cryptocurrency wallets started to bulge. According to researchers from TRM Labs – which specializes in fraud, money laundering, and financial crime – in the two weeks of that conflict Hamas raised cryptocurrency worth around $400,000.

This increased cryptocurrency activity caught the attention of security services in Israel and the world, which began to take regulatory measures against cryptocurrency exchanges and markets, in an effort to cut off the flow of money. It is not yet clear whether these measures have been effective or not, but, in April 2023, Hamas announced that it would no longer be accepting donations in Bitcoin, the most famous cryptocurrency.

As with everything that Hamas says, however, we should take this announcement with a pinch of salt: other cryptocurrency wallets linked to the organizations and its various branches, as well as wallets linked to Islamic Jihad, remain active and continue to raise funds in the months following. Israel itself revealed that it only managed to get a number of these wallets frozen on October 10, three days after Hamas' murderous terror attack and more than six months after the original announcement.

This cryptocurrency wallet is just one example of the dozens that are currently active. On October 19, for example, two more wallet numbers appeared on the GazaNow channel for cryptocurrency donations

The Story of One Wallet

GazaNow is a news platform on messaging app Telegram with around one million followers. Over the past two years, the channel has published several fundraising campaigns for Hamas and Islamic Jihad, which included the number of the cryptocurrency wallet where money should be transferred. Efforts to track the flow of money into and out of some of these wallets reveal that not insignificant sums have been transferred. The number of such wallet where donors could send money to these organizations, for example, was first published on the platform in August 2021 and appeared again subsequently. Over the period in question, around $800,000 was collected in that wallet. On the day after October 7, a further $20,000 was paid into the wallet.

This cryptocurrency wallet is just one example of the dozens that are currently active. On October 19, for example, two more wallet numbers appeared on the GazaNow channel for cryptocurrency donations – one for Ethereum and the other for Bitcoin. Although both wallets were only active for a few days before they were frozen, they managed to collect a total of tens of thousands of dollars.

The money deposited in these wallets is quickly withdrawn by the terrorist organization. The money in the abovementioned Ethereum wallet, for example, was transferred almost immediately to another wallet and then deposited in an account on an internet platform called Bybit, which is registered in the Virgin Island and operates out of Dubai. The platform, which acts as a cryptocurrency exchange, allows users to convert cryptocurrencies into cash while bypassing regulators and, in some cases, sanctions. Users can open an account using nothing more than an email address and a password and the platform offers several methods of withdrawing cash, some of which provide total anonymity for users, including an ATM card issued by Bybit, a QR code to withdraw cash or transferring money to bank accounts registered anywhere in the world.

As of 2021, the Bybit exchange was blocked from operating in the United States and, on October 1, it was forced to halt activities in the United Kingdom due to new regulatory measures. However, as stated, it still allows users to convert cryptocurrency into cash in many other countries.

Another platform through which money was deposited into cryptocurrency wallets that were published on the GazaNow channel is Binance, which is a Chinese company that operated out of Singapore for many years, and now relocated  to the Cayman Islands and Malta. Like Bybit, until August 2021 Binance only required users to provide an email address in order to register to use its services – a loophole that was taken full advantage of by criminal groups from Russia and North Korea.

Binance is currently under intensifying legal pressure in the United States over its alleged involvement in money laundering.

In the summer of 2021, while Operation Guardians of the Wall was being waged, Hamas’ cryptocurrency wallets started to bulge according to researchers from TRM Labs, which specializes in financial crime

The Network Full of Holes

In recent years, the Israeli law-enforcement system has increased its efforts to identify and thwart the cryptocurrency activities of terrorist organizations. Locating and freezing wallets is a complex mission in legal and technological terms, not only because they can be hard to identify, but because the legal process involved in shutting them down is anything but straightforward. To do so, Israeli authorities must obtain local seizure orders and then ask the court in those countries where the wallet-registering platforms are active to intervene. Alternatively, they can approach the platforms directly and hope that they will cooperate out of concern over being identified as processing terror money.

According to reports in the foreign press, in at least some of the cases this cooperation was, indeed, forthcoming, and the wallets were frozen. Incidentally, it is interesting to note that, in the past few weeks, Israeli companies and individuals who work in the field of cryptocurrency have volunteered their time in helping to identify suspicious wallets and bring them to the attention of Israeli authorities.

Either way, during the course of the past year, the Defense Ministry has succeeded in freezing several suspicious cryptocurrency wallets. This was revealed by none other than Defense Minister Yoav Gallant himself in an address he gave in June to the third annual conference organized by the National Bureau for Counter Terror Financing (NBCTF). “Alongside the permanent and uncompromising fight against terrorism and its agents, a new arena of combat has been added, the fight against the resources behind terrorism; and in simple words: the fight against terrorist funds," said Gallant. “This is the first event of this magnitude […] Whoever finances terror, or maintains a financial relationship with terror operatives, must know that he is a target, just like anyone who directs terrorism.”

Wallets remain active and continue to raise funds in the months following. Israel itself revealed that it only managed to get a number of these wallets frozen on October 10, three days after Hamas' murderous terror attack

Notwithstanding these determined comments, it is obvious that many wallets belonging to terrorist organizations continued operating without restrictions until Hamas’ barbaric attack on October 7. The Lahav 443 unit – Israel’s crime-fighting umbrella organization within the Israel Police – revealed that it had successfully frozen several cryptocurrency accounts belonging to Hamas, but that only happened three days after the massacre. The police did not provide any additional details, but based on the timing of the activity, it seems that one of aforementioned wallets promoted by GazaNow was among those frozen.

Another example is the order issued by Gallant in April 2023, which seized more than 80 Binance wallets linked to Hamas. The numbers of some of those wallets appeared in an official document that was published more than a year and half before the closure. In the meantime, hundreds of thousands of dollars have been transferred from them.

A third example is the administrative seizure order that the Defense Ministry issued on July 4 to freeze cryptocurrency wallets linked to Islamic Jihad. According to various reports, these wallets had a combined turnover of around $94 million. Money was transferred into these wallets from Iran as well as from other countries, in an attempt to disguise the source. Despite the administrative seizure order, some of these wallets continued to be active for some time.

As of publication time for this article, neither the Defense Ministry nor the Israel Police submitted a response. Any such response will be added to this article.