On January 29, 2019, Abu Obeida, the spokesman for Izz ad-Din al-Qassam, the armed wing of the Hamas, announced that the group is now accepting donations in bitcoin[i]. An attempt to get around international restrictions on funding the organization, by circumventing the banking system and international anti-money laundering (AML) measures.
Originating in 1987 after the beginning of the first Intifada as a spinoff of Egypt’s Muslim Brotherhood, and funded on the long-term goal of establishing strong Islamic states on all Palestinian territories by declaring war to Israel[ii], Hamas (Ḥarakat al-Muqāwamah al-ʾIslāmiyyah)[iii] is the Islamist group that for eleven years has ruled the Gaza Strip.
Perceptions of the group differ: Israel, US[iv], Canada, EU, Japan, Egypt, among others[v], say it’s a terrorist group that poses a grave obstacle to peace between Israelis and Palestinians, others argue it’s a true representative of Palestinians[vi] that won credibility with its grassroots charitable work and for being less corrupt than its rival, the Fatah faction of Palestinian Authority, which was Israel’s partner in peace talks[vii].
The group’s Economic Resources
Hamas raises money prevalently from taxes (e.g. cigarettes, auto registration fees, goods coming from Israel[viii]) and also regulates many types of businesses (e.g. street vendors, money-changing companies) requiring them to pay license fees. Hamas has also control over various Gaza resources, such as leasing government-owned heavy machinery to private contractors for a daily fee (one of many ways the group has been able to indirectly benefit from the international reconstruction funds flowing into Gaza).
Nevertheless, most of the group’s economic resources come from donations either from activists/sympathizers[ix] or from some Arab States sponsorships and private wealthy benefactors[x]as, for example: funding, weapons, and training from Iran[xi]; donations from the Palestinian global diaspora; fundraising (and propaganda) activities in Western Europe and North America through global charities[xii] affiliated with Hamas, which collect donations on its behalf.[xiii]
Hamas is calling for Bitcoin donations: the rules have changed
In economic terms, Hamas is finding itself pushed to the limit, facing unprecedented financial isolation due to banking bans against the Gaza Strip by Israel and the United States, while Iran is having financial trouble due to US sanctions. Even though Israel has allowed a $15 million monthly transfer from Qatar to the Gaza Strip in the framework of new understandings reached by Israel, Egypt, and Hamas, the terrorist group is still searching for more money to fund its activities[xiv].
Between these events, Abu Obeida calls for bitcoin donations to support Hamas.
Basing on the documented cases of jihadists’ use of cryptocurrencies (Bitcoin and other types of cryptocurrency: modern and undetectable ways to finance terrorism – Jihadists’ use of cryptocurrencies), in less than a week after making its e-wallet address, Hamas Bitcoin donation campaign has brought a radical change in this field.
As previously analyzed by ITSTIME (Cyber Jihad and Terrorism Financing: New Methods – Old Rules) the primary element able to turn cryptocurrencies from an experimental to a consolidated terrorism financing method, is an “institutional” approval coming from influent jihadist actors (e.g. extremist Islamic scholar or leaders of an international terrorist organization).
Before Hamas call for bitcoin donations, in those cases documented since 2012, terrorism financing experiments through cryptocurrencies have always been conducted from activists at various levels or small groups but never directly from an international Islamic terrorist organization[xv]. Indeed, the most relevant connections between cryptocurrency and an international terrorist organization are related only to a few cases, as the 4th issue released on October 2018 of al-Haqiqa magazine (an English-language magazine pro-al-Qaeda jihadists in Syria) asking for donations via either bitcoin or traditional currencies[xvi] or in the Akhbar al-Muslimin website, which used to publish news about Daesh, that launched an online fundraising campaign in November 2017 encouraging donations through Bitcoin[xvii]. Even though these two cases (as a very small number of other cases) seem to be strictly related to Daesh or al-Qaeda, none of their leaders has ever publicly encouraged the use of cryptocurrencies.
From this perspective, Hamas bitcoin donation campaign is already bringing to light some relevant elements of analysis.
- The number of donations has highly increased
Hamas military wing issued via Telegram a request to donate to the organization by using Bitcoin. On January 31, 2019, it published a first virtual wallet address and a second one on February 2[xviii]. The bitcoin addresses provided by Hamas, to date, have already totally received 77 donations for the equivalent of $3.477,85.
It is relevant that, in the same day, also Al-Nasser Salah al-Deen Brigades, the military wing of the Popular Resistance Committees (a coalition of various armed Palestinian factions active since 2001 in the Gaza Strip, opposing to the conciliatory approach adopted by the Palestinian Authority and Fatah towards Israel)[xix] used its Twitter account to call on the public to donate via bitcoin and share a link of a private Telegram account in order to give assistance or explanations. The call read: “For those who love jihad and the resistance in occupied Palestine, you can send donations through Bitcoin.” The address shows that the group is receiving bitcoin donations since 2015 almost on a daily basis (4170 transactions) for a total amount of 863.49824685 BTC, almost $3millions.
It has to be taken into account that the Popular Resistance Committees are strong allies of Hamas and Islamic Jihad[xx], meaning that the terrorist organizations may have agreed in choosing the crypto-way (with a fair degree of success) to receive donations or launder money since more than 3 years ago and that only now, given the strict sanctions against Hamas, they’ve been forced to go public.
- Overlapping the religious and ideological justification: it seems that after the first announcement made by Abu Obeida on January 29 about the incoming possibility to make donations via bitcoin to the organization, many activists and supporters have raised questions about cryptocurrencies. Indeed, the day after, Hamas published an infographic about the Bitcoin in the Hamas-affiliated newspaper Al-Resalah explaining what Bitcoin is and, probably in order to reassure its supporters about their investment, that daily trade in bitcoin amounts to $6 million, and the total amount on the Internet is estimated at $61 billion.[xxi]
Furthermore, it is relevant that Hamas donation campaign in bitcoin is the first jihadist case in this field without any particular religious justification concerning the use of cryptocurrencies. Indeed, even though the debate about cryptocurrencies is still ongoing in the Islamic community and among Islamic scholars, it seems that, in this case, donors are prevalently worried about their investments rather than use a not yet fully recognized Sharia-compliant product as a mean of payment[xxii].
For Hamas was enough to claim that “The Zionist enemy fights the Palestinian resistance by trying to cut aid to the resistance by all means, but lovers of resistance around the world fight these Zionist attempts and seek all possible means to aid the resistance” to convince its supporters that cryptocurrencies are a legitimate method to fund jihad.
There’s not a Lack of technical skills: the research conducted by the Israeli blockchain intelligence startup Whitestream shows some sophisticated procedures in the donation process to the Hamas bitcoin address. Some donations come from US cryptocurrency exchange Coinbase and US trading platform Bittrex, other are connected to the Chinese cryptocurrencies exchange Binance, to a Russian cryptocurrencies exchange Vilkov, and to CoinPayments, a company registered in the Cayman Islands. Furthermore, the US exchange platform Coinbase is only available in US, Canada, Australia, Singapore, and 38 European countries, but is not available in Palestine, and Israel, showing that donations are not coming only from local activists but are likely to come from Western sympathizers.
Moreover, in some cases an efficient method of money laundering has been used to transfer Bitcoin to Hamas, through coinMixer.io mixing service, a technology able to mix different addresses of digital currencies, thereby making it difficult to identify their users[xxiii].
Then, while many of the addresses involved in the bitcoin donations to Hamas are holding a small amount of Bitcoin, others are coming from wealthy donors.
Positive and negative aspects of the near future scenario
Further developments are likely to come soon in this field. The call for donations in bitcoin made by Hamas could be the beginning of a consolidated trend in terrorism financing or an occasion to improve prosecution and investigation methods of this crime.
From this analysis, it is possible to highlight either negative or positive aspects.
On the one hand
- Due to the anonymity provided by cryptocurrencies, terrorists are now freely calling for donations. Indeed, even though exchange platforms ban their bitcoin address, it is still possible for them to create a new one in a few minutes and keep on receiving donations. Terrorist groups and their affiliates can make public donation requests by exploiting social media or encrypted chats, reinforcing their cultural sense of community among their supporters while circumventing the conventional banking system.
On the other hand
- Blockchain technology is offering an unprecedented tool for investigations. From one single transaction can be traced back all the financial history of the people involved in one crime. In these terms, the jihadist exploitation of cryptocurrencies is a double-edged sword.
- Maybe Hamas is still able to explicitly make calls for donation in bitcoin due to the fact that its goal is prevalently political and not only religious or ideological. But for other Islamic terrorist groups’ leaders (as in the case of al-Qaeda or Daesh) explicit public call for cryptocurrencies could still be a risky move. There’s not yet a broadly shared Islamic religious justification to consider mainstream virtual currencies (as Bitcoin, Zcasch or Monero) as a Sharia-compliant mean of payment: Islamic scholars are still considering cryptocurrencies as gambling due to their high price volatility. In these terms, their exploitation for jihadist purposes is not fully justified by the whole Islamic community, and their use could be leverage for de-radicalization and counter-narratives able to expose their economic and geopolitical “holy war”.
These are elements to work on. But the perspective of terrorist groups shouldn’t be underestimated. In less than a week Hamas has shown how quickly rules can be changed in terrorism financing.
In a short range of time, jihadist groups’ economic needs, added to the exploitation of modern financial tools, could demonstrate how even religious justifications can be unpredictable and asymmetric when dealing with jihad.
[i] M. Arnold, S. A. Ramadan (January 30, 2018) Hamas Calls on Supporters to Donate to Group in Bitcoin. Bloomberg. https://www.bloomberg.com/news/articles/2019-01-30/hamas-calls-on-supporters-to-donate-to-group-in-bitcoin
[ii] M. Levitt, D. Ross (2007) Hamas: Politics, Charity, and Terrorism in the Service of Jihad. Yale University Press.
[v] Profile: Hamas Palestinian Movement (May 12, 2017) BBC. https://www.bbc.com/news/world-middle-east-13331522
[vi] J. Khoury (June 10, 2017) For Arab World, Hamas Is ‘Legitimate Resistance Movement,’ Not Terror Group, Qatar Says. Haaretz. https://www.haaretz.com/middle-east-news/palestinians/qatar-hamas-is-legitimate-resistance-movement-1.5482546
[viii] “Hamas also takes a hefty cut from the Egyptian tunnel trade, imposing high “customs” duties and a daily fee on local tunnel contractors. Such trade has been dramatically reduced since June 2010, when Israel quadrupled the number of trucks permitted to bring goods to Gaza through legal terminals. To replace lost tunnel income, Hamas is reportedly taking advantage of the relative drop in prices on goods arriving via official Israeli channels, imposing new taxes on various items. For example, from early July to September 20, 2010, the group barred the importation of new cars from Israel until the taxation issues were resolved.” E. Year, E. Ofer (January 6, 2011) Gaza’s Economy: How Hamas Stays in Power. The Washington Institute. https://www.washingtoninstitute.org/policy-analysis/view/gazas-economy-how-hamas-stays-in-power
[ix] E. Year, E. Ofer (January 6, 2011) Gaza’s Economy: How Hamas Stays in Power. The Washington Institute. https://www.washingtoninstitute.org/policy-analysis/view/gazas-economy-how-hamas-stays-in-power
[x] BUREAU OF COUNTERTERRORISM AND COUNTERING VIOLENT EXTREMISM (2016) Country Reports on Terrorism. US Department of State. https://www.state.gov/j/ct/rls/crt/2016/272235.htm
[xi] Country Reports on Terrorism (2008) U.S. Department of State. https://www.state.gov/j/ct/rls/crt/2007/103714.htm
[xii] (October 4, 2012) Treasury Sanctions Two Hamas-Controlled Charities. U.S. Department of Treasury. https://www.treasury.gov/press-center/press-releases/pages/tg1725.aspx
[xiv] R. Katsiri (February 3, 2019) Hamas raises bitcoin donations via US crypto exchange. Globes. https://en.globes.co.il/en/article-hamas-raises-bitcoin-donations-via-us-crypto-exchange-1001271661
[xv] D.M. Barone (October 22, 2018) Europol – Internet Organized Cyber Crime Threat Assessment 2018: new trends in the obscure sides of FinTech. ITSTIME. http://www.itstime.it/w/europol-internet-organized-cyber-crime-threat-assessment-2018-new-trends-in-the-obscure-sides-of-fintech-by-daniele-maria-barone/
[xvi] (October 15, 2018) 4th issue of al-Haqiqa magazine. Site Intel Group. https://ent.siteintelgroup.com/Western-Jihadists/4th-issue-of-al-haqiqa-magazine-features-interview-with-ttp-commander-promotes-password-security-and-bitcoin-donations.html
[xvii] (December 6, 2017) Drive for Bitcoin Donations on an ISIS-affiliated website. The Meir Amit Intelligence and Information Center. https://www.terrorism-info.org.il/en/drive-bitcoin-donations-isis-affiliated-website/
[xviii] (February 4, 2019) HAMAS AND THE POPULAR RESISTANCE COMMITTEES CALLED ON THEIR SUPPORTERS TO DONATE MONEY USING THE VIRTUAL CURRENCY BITCOIN. The Meir Amit Intelligence and Information Center. https://www.terrorism-info.org.il/en/hamas-popular-resistance-committees-called-supporters-donate-money-using-virtual-currency-bitcoin/
[xix] Popular Resistance Committees – Palestine. TRAC. https://www.trackingterrorism.org/group/popular-resistance-committees-palestine
[xx] Mapping Palestinian Politics – Popular Resistance Committees (PRC). ECFR. https://www.ecfr.eu/mapping_palestinian_politics/detail/popular_resistance_committees
[xxi] (February 4, 2019) HAMAS AND THE POPULAR RESISTANCE COMMITTEES CALLED ON THEIR SUPPORTERS TO DONATE MONEY USING THE VIRTUAL CURRENCY BITCOIN. The Meir Amit Intelligence and Information Center. https://www.terrorism-info.org.il/en/hamas-popular-resistance-committees-called-supporters-donate-money-using-virtual-currency-bitcoin/
[xxii] D.M. Barone (August 16, 2018) Cyber Jihad and Terrorism Financing: New Methods – Old Rules. ITSTIME. http://www.itstime.it/w/cyber-jihad-and-terrorism-financing-new-methods-old-rules-by-daniele-maria-barone/
[xxiii] R. Katsiri (February 3, 2019) Hamas raises bitcoin donations via US crypto exchange. Globes. https://en.globes.co.il/en/article-hamas-raises-bitcoin-donations-via-us-crypto-exchange-1001271661