After the recent Hamas attack on Israel, there has been speculation in various media outlets about the use of cryptocurrencies to finance terrorist activities. However, blockchain analysis firm Chainalysis suggests that the situation may not be as simple as it is portrayed.
In a blog post published on May 19th, Chainalysis argues that while some terrorists do use cryptocurrencies, the actual amount of funds raised may have been greatly exaggerated. Specifically, Chainalysis references recent claims that over $80 million in cryptocurrency was channeled to Hamas, stating that in reality, the funds likely originated from terror-related wallets amount to around $450,000.
Chainalysis Clarifies the Reason Behind Inflated Estimates
According to Chainalysis, some reports have included total amounts that already account for known transactions from all crypto funds sent to specific service providers, regardless of any connection to terrorism. Therefore, although a service provider may have processed $80 million in cryptocurrency overall, it is unlikely that the funds were used to finance terrorism.
The firm also acknowledges the role of service providers in enabling the financing of terrorism, highlighting that even though the volume of such transactions may be relatively small, these providers facilitate the movement of funds associated with terrorism. As a result, Chainalysis suggests that sanctions and law enforcement operations targeting these facilitators are necessary.
While the details of the situation are complex, Chainalysis asserts that cryptocurrencies make up only a “very small portion” of the funds raised by terrorist groups. Traditional methods such as bank transfers and cash transactions are still more prevalent. However, as cryptocurrencies continue to gain prominence, Chainalysis concludes that regulators and law enforcement authorities must remain vigilant against the potential misuse of cryptocurrencies by terrorist organizations.
Featured Image Credit: From the Chainalysis Website. Thank you!
