Experts call cryptocurrencies' role in supporting terrorism exaggerated

Chainanalysis report: the role of cryptocurrencies in terrorism financing is exaggerated

Chainanalysis analysts questioned the data from a number of reports on the use of cryptocurrency to finance terrorism. According to them, these figures may be greatly exaggerated.

"Although terrorist financing accounts for a very small portion of the already small proportion of illicit cryptocurrency transactions, some terrorist organizations do raise, store, and transfer funds using digital assets," the analytics company said in a blog post. "Terrorist organizations have historically used and will likely continue to use traditional, fiat methods such as financial institutions, hawala (informal receipts used in the Middle East, Asia, and Africa. - Soft4bro.com ) and one-day firms as the primary means of raising funds," the authors explain.

Earlier, The Wall Street Journal published a large piece on the transfer of cryptocurrency to the accounts of the Hamas group, including through the Russian exchange Garantex. Journalists, in turn, referred to data from a report by another analytical company - Elliptic.

After the October 7 attack on Israel by the Palestinian Hamas movement, a variety of media outlets published articles trying to assess the role of digital assets in the preparation of the military operation. On October 17, 86 members of the U.S. Congress drafted a letter to President Biden calling cryptocurrencies a threat to national security.

"The fact that Hamas' deadly attack on Israeli civilians occurred when the group has become one of the most sophisticated users of cryptocurrencies in financing terrorist activities underscores the national security threat that digital currencies pose to the United States and our allies," the letter from U.S. lawmakers said.

Chainanalysis analysts believe that the figures in the media reports include not only those funds that were actually used to finance terrorism but also a large amount of unrelated revenue. "To the untrained reader, it may appear that $82 million in cryptocurrency was allocated to terrorism financing," they write. - "But it is far more likely that only a small portion of these funds were actually earmarked for terrorist financing, and the bulk were merely spent through a shared service and unrelated to illegal activity.

The company estimates that only $450,000 of the $82 million announced earlier in the media can be unambiguously attributed to funds aimed at financing terrorist activities. Analysts, although they question the figures cited in the media, at the same time emphasize that cryptocurrency services are obliged to block funds associated with terrorist organizations.

Last week, the Israeli police said that together with Binance, they froze cryptocurrency accounts belonging to Hamas. The addresses of the donation wallets had been published by the group on social media since the first day of the escalating conflict.