In a recent move against illicit financing, the U.S. Justice Department (DOJ) announced on March 27 that they’ve successfully seized over $200,000 in cryptocurrency. This digital money, according to a statement from the DOJ, was reportedly intended to benefit the militant group Hamas.

Investigators tracked down the cryptocurrency, valued at $201,400, and linked it to fundraising addresses allegedly under Hamas’s control. Authorities believe these addresses were used to launder a significant sum – over $1.5 million in digital assets – since October 2024.

According to the DOJ, this money laundering operation involved a complex web of “virtual currency exchanges and transactions,” utilizing suspected financial facilitators and over-the-counter brokers. The seized funds are currently secured across at least 17 different digital wallets.

This action builds on previous efforts to crack down on crypto-related terrorism financing. Back in January 2024, the US Treasury’s Office of Foreign Assets Control, in collaboration with counterparts in the UK and Australia, had already imposed sanctions on networks and individuals facilitating Hamas-linked crypto transactions. These earlier sanctions were an extension of initial US Treasury sanctions issued in October 2023.

Adding to the pressure on the crypto industry, January 2024 also saw three families of victims from the Hamas attack against Israel file a lawsuit against Binance and its former CEO, Changpeng Zhao. The lawsuit alleges that the exchange provided “substantial assistance” to terrorists. However, during oral arguments, Binance’s legal representation countered by stating the exchange had “no special relationship [with] Hamas […]”.

It’s worth noting that Binance has been under increased scrutiny from US regulators regarding its Anti-Money Laundering (AML) protocols. This culminated in a $4.3 billion settlement with the DOJ in November 2023.

More regulation needed?

A report from the Congressional Research Service, released in December 2024, indicates that Hamas may have been exploring cryptocurrency donations as far back as 2019. However, the report also pointed out that the “scale and effectiveness” of these fundraising attempts remained unclear.

The growing use of crypto for terrorist fundraising is increasingly worrying US authorities. This has sparked debate among officials about whether the crypto industry requires tighter supervision or more robust regulation to effectively prevent such activities.

However, according to a 2023 report by Chainalysis, terrorism financing represents only a tiny fraction of overall cryptocurrency usage. The report suggests that illegal groups still primarily rely on traditional, fiat-based methods for funding their operations and activities, even in the digital age.

Magazine: Terrorism and the Israel-Gaza war have been weaponized to destroy crypto