US Treasury Says Crypto Contributed Small Part in Hamas' Terrorist Financing 

US Treasury Says Crypto Contributed Small Part in Hamas’ Terrorist Financing 

On February 14, the US Treasury Undersecretary for Terrorism and Financial Intelligence Brian Nelson confirmed that crypto played a small role in terrorist financing.

Speaking exclusively before the House Financial Services Committee, the Treasury criticized earlier reports claiming the Hamas and the Palestine Islamic Jihad groups received tens of millions of crypto to fund their unlawful activities.

Role of Crypto in the Hamas-Israel War

Based on his observation, the Treasury labeled earlier publications concerning Hamas crypto funding as inaccurate. Citing a publication from the Wall Street Journal, Nelson noted that the American media outlet focused on the wallets used to transfer funds to the Hamas group.

The official noted that the WSJ did not clarify the amount of crypto the customers’ wallets held before  Hamas invaded Israel. Nelson’s comment ignited mixed reactions from the members of the committee.

In a separate statement, the US House representative Tom Emmer requested that Nelson clarify whether the reported amount was available on customers’ wallets. Also, Emmer demanded clarity on the crypto amount sent to the illicit groups during the Hamas-Israel war.

In response to this, Nelson argued that most people believe that the reported amount on customers’ wallet holding was equivalent to what was transferred to the Hamas group.

Based on the credulity of information concerning Hamas crypto funding, Nelson confirmed that the illicit groups prefer conventional products and services to crypto assets.

Use of Crypto in Illicit Activities

In a subsequent question, Emmer demanded to know the amount recovered from the group. Based on the complexity of the matter, Nelson argued that the amount retrieved by law enforcement units from Hamas and Palestine Jihad was not much.

Nelson confessed that the amount used by Hamas to finance their unlawful activities was smaller than what was reported by the media groups. Also, Emmer questioned Nelson on what step the US treasury will take to correct the misrepresented figure on Hamas crypto funding.

The legislator argued that the report on Hamas crypto funding had been the center of discussion in most meetings. Emmer noted that policymakers in the US were using figures posted by different media sites on Hamas crypto funding to draft policies for digital assets.

Responding to the multiple questions from Representative Emmer, the official confirmed that the Treasury was currently assessing the use of crypto in terrorist financing. Citing an earlier report, Nelson urged Congress to support regulatory agencies with the necessary tools and resources to address the use of illicit crypto activities.

US Policy Makers Calls for Comprehensive Crypto Rules

Initially, the WSJ had confirmed that Palestine Islamic Jihad and Hamas groups received crypto assets totaling $93 million and $41 million between August 2021 and June last year.

The figures quoted by the WSJ attracted the attention of renowned blockchain analysts to examine the exact amount the illicit group received from the crypto community.

Shortly after the WSJ publication, the American blockchain analytics firm Elliptic argued that the amount reported by the media team was incorrect. The Elliptic team argued that the WSJ article lacked substantial evidence that the illicit group raised multimillion dollars worth of crypto.

In the report, the Elliptic team claimed that neither Hamas nor the Palestine Jihad generated the reported amount. The comments from the Elliptic team forced the WSJ to amend the article to capture the accurate figures.

In the revised report, the WSJ noted that the Palestine Islamic Jihad raised $12 million in crypto. The WSJ report obliged vital policymakers in the US to take decisive action against the use of crypto in terrorist financing.

The discovery of the use of crypto in illicit activities forced Massachusetts Senator Elizabeth Warren to launch an intensive campaign on the need to regulate crypto assets.

To convince the other policymakers of the significance of addressing the use of crypto in terrorist finance, Senator Warren drafted the Digital Asset Anti-Money Laundering Act of 2023 (DAAMLA). The new bill outlines the need to safeguard US national security by regulating crypto assets.

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