The use of cryptocurrency by Hamas and militant groups, while significant, pales in comparison to the amount of cryptocurrency used by other illicit actors. Hamas, for example, has collected $41 million in cryptocurrencies over the past two years, and Palestinian Islamic Jihad has collected $91 million, according to a report published last week in the newspaper. The Wall Street Journal which cited analyzes by cryptocurrency tracking companies and seizures by the Israeli government.
However, it is unclear how much of these funds actually reached these groups before being seized. In fact, Hamas has asked its donors to stop using cryptocurrency in April 2023, due to the public nature of transactions on blockchains and the risk of prosecution. Cryptocurrency tracing company Chainalysis, which frequently works with government and law enforcement clients, went so far as to publish a blog post yesterday warning of flawed analyzes that overstate the role of cryptocurrency. cryptocurrency in the financing of entities like Hamas and the Palestinian Islamic Jihad.
In contrast, North Korean state-sponsored cybercriminals, Russian ransomware gangs and other criminal groups have pocketed billions of dollars through stealing cryptocurrencies or using the technology as a means to demand money. extortion payments to victims. Thieves stole $3.8 billion in cryptocurrency last year – much of which went to the North Korean regime – and ransomware hackers extorted nearly $450 million in the first half of 2023 only, according to Chainalysis.
These criminals often use cryptocurrency mixing services, pumping hundreds of millions of dollars into services like ChipMixer and Sinbad.io. In fact, U.S. law enforcement and the Treasury Department have aggressively sanctioned or shut down one blending service after another in recent years, including Blender, TornadoCash, and Bitzlato, often citing their use to launder the profits of these North Korean and Russian pirates.
The new FinCEN rules would be less severe than those sanctions, indictments and arrests – a new regulatory process rather than a ban – but also much broader in scope, says Jason Somensatto, head of North America public policy at Chainalysis . “The impact can be much broader,” says Somensatto. “They can say that this applies to all mix the services people interact with.
As the Treasury doubles down on its efforts to stop crypto-based money laundering – and now points to Hamas as a new impetus for this crackdown – TRM Labs’ Redbord warns that US regulators should not go too far in censoring services that do so, in some cases, provide financial privacy to legitimate users. After all, without mixers, most cryptocurrency transactions are completely public in nature. “I think the challenge for regulators is how do we bridge the gap between preventing illicit actors from using these platforms while still allowing regular users to ensure some degree of privacy? Redbord said. “I think the problem is that it could very well throw the baby out with the bathwater.”
