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WSJ Misleads on Hamas Crypto Funding, But Senators Bay for Blood

Elliptic denounced misinterpreted data on crypto donations to Hamas, while U.S. lawmakers seek an investigation into Binance and Tether's potential links to terrorism funding.

Update: The Wall Street Journal has now corrected its original article to more accurately reflect the data.

Warren's office added to the confusion

Following Hamas' deadly attacks in Israel on October 7, certain media outlets initially reported that the terrorist group had received tens of millions in cryptocurrency donations. However, Elliptic, the blockchain analytical firm referenced in these reports, revealed on October 25 that this data was misinterpreted and significantly exaggerated.

In an October 17 letter addressed to the White House and the U.S. Department of the Treasury, more than a hundred U.S. lawmakers, including Senator Elizabeth Warren, cited an October 10 WSJ report, titled "Hamas Militants Behind Israel Attack Raised Millions in Crypto", claiming more than $90 million in crypto donations had been made to terrorist groups. They asserted that, leading up to the October 7 attack on Israel, Hamas and Palestinian Islamic Jihad (PIJ), another terrorist group operating in the Gaza Strip, had generated millions of dollars in cryptocurrency. This was allegedly done to evade U.S. sanctions and provide funding for their operations. The letter contended that between August 2021 and June 2023, these two groups had amassed over $130 million in cryptocurrency.

Elliptic has clarified that Hamas began soliciting Bitcoin donations in 2019, with a peak in donations during the May 2021 outbreak of violence in the region. However, in April 2023, Hamas suspended all public-facing cryptocurrency fundraising activities, citing concerns about donor safety and intensified efforts against those supporting the group through crypto. This decision followed U.S. law enforcement operations aimed at seizing crypto wallets used for laundering donations, identifying donors, and shutting down fundraising websites.

The Wall Street Journal's report also featured analysis from BitOK, an Israeli research firm. BitOK found that "wallets connected to Hamas" had received over $40 million in cryptocurrency over the same two-year period. In a statement shared on Twitter, BitOK acknowledged its reliance on information from Israeli seizure orders. However, unlike Elliptic, BitOK did not explicitly refute the conclusions presented in the Journal's report. It did emphasize the importance of ensuring accuracy in such matters and recognized that not all funds transiting through these addresses could be definitively linked to terrorism.

In July, the National Bureau for Counter-Terror Financing (NBCTF) issued an order to seize cryptocurrency wallets associated with the PIJ. An analysis conducted by Elliptic revealed that these wallets had received transactions totaling slightly over $93 million between 2020 and 2023.

Elliptic highlighted that this doesn't imply that the PIJ raised the entirety of these funds or that they were all exclusively owned by the PIJ, and that the specific share of funds directly linked to the PIJ or other terrorist groups remains uncertain. It is likely that some of the wallets identified by the NBCTF may have belonged to smaller service providers, like brokers, that were used by the PIJ. Elliptic also noted that acknowledging this does not diminish the role of these service providers. Many of these smaller crypto brokers used by terrorist groups have themselves been designated as terrorist entities due to their crucial role in financing terror

The firm declared that further research to gain a comprehensive understanding of how terrorist groups leverage cryptocurrency assets, including their involvement in acquiring supportive infrastructure, is an absolute necessity.

In response, a Wall Street Journal reporter, Ian Talley, who also co-authored the October 10 WSJ piece, has claimed that Elliptic presented a different narrative to this back in July. However, readers have since added context to the X post, suggesting that Talley had misrepresented the original report by selectively quoting only parts of the text that support his narrative.

Call to investigate Binance involvement in Hamas funding

Additionally, Elliptic cited that, in 2021, Israel's NBCTF collaborated with exchanges, such as Binance, to freeze accounts related to crypto wallets associated with Hamas, as part of its seize order. However, two U.S. legislators consider this move as too little too late.

Cynthia Lummis, a Wyoming Senator and crypto advocate, has called on the U.S. Justice Department to consider charges against Binance following the Hamas attacks. In a letter dated October 26 to U.S. Attorney General Merrick Garland, Lummis, and Arkansas Representative French Hill urged the Justice Department to swiftly make a decision on charges against Binance and expedite investigations into alleged illicit activities involving Tether.

They suspect that illicit crypto transactions played a role in financing the October 7 attacks, and they want the Justice Department to assess whether Binance and Tether are providing support for terrorism through violations of applicable sanctions laws and the Bank Secrecy Act. The lawmakers support taking swift action to cut off funding sources for the terrorists targeting Israel.