US Lawmakers Call for Clarity on Crypto Terrorism Financing

More than 100 US lawmakers have urged the Biden administration to provide clear details about its strategies to combat global terrorist financing facilitated through cryptocurrencies. This bipartisan call for action comes in the wake of alarming reports revealing how Hamas, the Islamist organization responsible for recent attacks on Israeli civilians, had leveraged cryptocurrencies to amass millions of dollars over the past two years.

US lawmakers, referencing information from the Wall Street Journal, disclosed that between August 2021 and June 2023, both Hamas and Palestinian Islamic Jihad (PIJ) managed to raise over $130 million in cryptocurrencies. Shockingly, $12 million of these funds were purportedly funneled to the Islamist militant group Hezbollah this year. Concerns over the use of crypto assets in financing terrorism prompted the US lawmakers to request additional specifics from the administration.

Ongoing Efforts and Challenges

While the Israeli government has taken some steps to combat financing for Hezbollah and Hamas, lawmakers stressed that only a “small percentage” of the crypto funds flowing through these militant groups have been seized. Binance, a major cryptocurrency exchange, recently collaborated with Israeli police to seize more than 100 Hamas-linked exchange accounts. Additionally, Israel seized $1.7 million connected to Hezbollah and Iran, demonstrating active efforts in curbing these illicit financial activities. However, challenges remain, necessitating stronger actions to prevent cryptocurrencies from being misused for nefarious purposes.

US Lawmakers’ Information Requests

The US lawmakers leading this initiative, including U.S. Representative Sean Casten (D-Ill.) and senators Roger Marshall (R-Kan.) and Elizabeth Warren (D-Mass.), have put forth specific requests. They are seeking an estimation of the crypto assets currently held by Islamist military groups. The letter also demands insights into the challenges faced by the government in halting successful fundraising campaigns through cryptocurrency channels. Furthermore, the lawmakers are keen on identifying the actors facilitating these transactions. Notably, most of the PIJ accounts at Binance primarily utilized the stablecoin tether for transactions.

Recent Actions and Sanctions

In a recent development, Tether, a prominent stablecoin issuer, took action by freezing over $800,000 in USDT from crypto addresses linked to terrorism in Israel and Ukraine. Additionally, the U.S. Treasury’s Office of Foreign Assets Control announced sanctions against a Gaza-based Bitcoin exchange and its founder for their connections to Hamas. 

Senator Elizabeth Warren, a vocal critic of cryptocurrencies, has been at the forefront of urging regulatory action. Earlier this year, she joined several Democrat senators in urging the Treasury and IRS to propose rules addressing the estimated $50 billion tax gap within the U.S. crypto industry. Her efforts to combat crypto’s involvement in global fentanyl trading have also gained attention.