Chainalysis Disputes Estimates of Hamas Crypto Funding

• Chainalysis disputes reports of millions in cryptocurrency funding Hamas, citing overstatement.
• The Wall Street Journal claimed Palestinian militant groups received over $130 million in crypto donations from 2021 to 2023.
• Critics argue that the role of crypto in funding Hamas attacks was exaggerated, as it’s a small portion of total terror financing.

Blockchain analytics company Chainalysis is pushing back on recent reports about millions in cryptocurrency allegedly funding Hamas operations against Israel. While acknowledging the importance of stopping any terror financing, Chainalysis argues the crypto flows have been “overstated.”

Last week, the Wall Street Journal reported that Palestinian militant groups received over $130 million in crypto donations from 2021 to 2023. Critics said the headline exaggerated crypto’s role by implying it directly funded Hamas attacks. They also noted that crypto is a small portion of total terror financing.

Chainalysis argues the reported totals likely count all crypto sent to service providers vaguely linked to Hamas, not funds literally controlled by terrorists.

“We have seen estimates related to the attacks on Israel that appear to include all flows to certain service providers that received some funds associated with terrorism financing,” the firm wrote in a blog post. “In other words, those totals include funds not explicitly related to terrorism financing.”

Chainalysis says transparency makes crypto a poor tool 

Chainalysis says transparency makes crypto a poor tool for covert financing. Hamas itself halted crypto fundraising in April after determining blockchain tracking put operations at risk.

The debate has implications for U.S. policy as lawmakers propose anti-money laundering rules for crypto. Senators Elizabeth Warren and Roger Marshall cited the disputed Hamas financing reports while advocating for stricter oversight.

But Chainalysis argues that inflated estimates could lead to overbroad regulations that encumber lawful crypto activity without actually stopping illicit transactions.

While stressing that any amount of terror financing must be stopped, Chainalysis advises lawmakers and regulators to work with blockchain analysis firms to understand how illicit crypto flows actually operate.

That nuanced insight can inform pragmatic policy solutions rather than blanket crypto crackdowns. Despite its flaws as a terror funding tool, crypto remains a focus for law enforcement given its semi-anonymous nature.

How regulators approach crypto oversight could have major impacts on the industry. But Chainalysis believes fact-based analysis should anchor the debate, not politics or exaggeration.