US Treasury Official Refutes Claim of Extensive Crypto Funding for Militant Groups
Summary:
A US Treasury official has clarified that militant groups Hamas and the Palestinian Islamic Jihad received only a minor portion of their funding through cryptocurrencies, challenging former reports that claimed they received tens of millions. The discussion surrounding the accuracy of numbers arose during a session with the House Financial Services Committee. The use of cryptocurrency by terrorist groups is being carefully scrutinized by the Treasury, while lawmakers are using the flawed data to draft regulatory bills, resulting in resistance from the cryptocurrency industry.
Contrary to previous reports, militant outfits Hamas and the Palestinian Islamic Jihad received only a minor share of their financing through cryptocurrencies, according to a US Treasury official. A claim alleging these groups obtained tens of millions via digital currencies was unfounded. During a meeting of the House Financial Services Committee on February 14, Treasury Undersecretary for Terrorism and Financial Intelligence Brian Nelson noted that the figures in the original article from The Wall Street Journal referred to amounts in wallets, not the specific quantities members of these groups held.
Hoping for a clearer picture, legislator Tom Emmer raised the question of whether the reported sums belonged to individual holders instead of being specifically directed for Hamas and Palestinian Islamic Jihad. Nelson agreed, stressing that traditional methods remain the preferred mode of transactions for terrorists. The erroneous reporting by The Wall Street Journal is shaping forthcoming legislation, leading Emmer to highlight the Treasury's responsibility in setting the record straight on the scale of digital fundraising by Hamas in a February 14, 2024 tweet.
A correction was made to an earlier claim by The Journal in an October report stating that between August 2021 and June 2023, Palestinian Islamic Jihad and Hamas had amassed $93 million and $41 million respectively through cryptocurrencies. Following Elliptic's criticism—the blockchain analytics firm that provided the initial data—the amount purportedly received by Palestinian Islamic Jihad was reduced to $12 million. Elliptic contested the original report, arguing it lacked substantial evidence that such large quantities of money were raised via crypto.
Senator Elizabeth Warren, along with more than a hundred other US lawmakers, used The Journal’s information to persuade support for new legislation aiming to limit illegal usage of digital currencies under the pretext of national security. This proposed legislation, however, was met with opposition from within the cryptocurrency industry, which argued it would neither be effective nor beneficial, instead threatening to push the sector abroad.
During the House committee hearing, Emmer queried about the actual amounts obtained via crypto by these organisations. In Nelson's estimation, these figures were unlikely to be high. When Emmer sought clarification on the minimal cryptocurrency usage by Hamas versus what was widely reported, Nelson affirmed this assessment. Emmer further queried if the Treasury was responsible for amending the record regarding crypto financing for terrorists, particularly since false data was influencing upcoming legislation. Nelson confirmed that the Treasury was keeping a close eye on the use of cryptocurrencies by terrorists, voicing an earlier request for supplementary resources to mitigate illicit financing in virtual asset markets. The ongoing conflict between Israel and Gaza and the rise in terrorism have been leveraged as tools to weaken the crypto sector, as suggested in a magazine article.
Published At
2/15/2024 9:54:42 AM
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