Blockchain Forensics Firm Elliptic Challenges Reports on Crypto’s Role in Terrorism Funding

Recent reports suggesting that crypto has played a significant role in terrorism funding have been debunked by blockchain forensics firm Elliptic.

According to a report by Elliptic published this week, the transparency and traceability of the blockchain make it challenging for terrorist groups like Hamas to effectively use crypto for fundraising.

Hamas, which began soliciting Bitcoin (BTC) donations in 2019, saw its crypto fundraising peak during the May 2021 outbreak of violence.

However, in April 2023, it suspended all public-facing crypto fundraising activities due to safety concerns for donors and increased scrutiny by law enforcement.

Additionally, the seizure of crypto wallets, the identification of donors, and the shutdown of fundraising websites hindered their efforts.

Elliptic noted that the most prominent crypto fundraising campaign following the October 7^th Hamas attacks received only $21,000 in crypto donations, a significant portion of which was frozen by crypto businesses and researchers.

In contrast, crypto fundraising for humanitarian causes in Israel received substantial support.

Challenges crypto terror fundraising narrative

The findings challenge the perception that terrorist groups have successfully raised millions of dollars through crypto fundraising.

In July, the National Bureau for Counter Terror Financing issued a seizure order for crypto wallets linked to the Palestinian Islamic Jihad, which allegedly received over $93 million in transactions between 2020 and 2023.

However, Elliptic clarified that this doesn’t mean the group “raised” all these funds, and some of the wallets likely belonged to small service providers used by terrorist organizations.

In the report, Elliptic also emphasized the importance of a nuanced and detailed understanding of blockchain analysis when discussing sensitive topics like crypto’s role in terrorism funding.

“Terrorist groups do make use of cryptoassets for public fundraising, but the amounts involved are tiny relative to other funding sources,” the firm said, before concluding:

“Careful and detailed understanding of blockchain analysis is needed whenever approaching a nuanced and sensitive topic such as this, and the full context of any analysis should be provided by those using these insights.”