In February, Israeli media took notice of statements by Bulgarian Attorney General Ivan Jeshev, who said his country might turn to Israel for help in its investigation into suspected cryptocurrency trading in violating sanctions on Russia and financing terrorism. Sophia's use of Israel is a sign of her reputation in this field, after she gained great experience in tracking cryptocurrencies, which resistance movements have resorted to in recent years to overcome the Israeli blockade. Israel, for its part, has shown great interest in this case as it concerns the cryptocurrency lending company Nexo, based in the Bulgarian capital, a company accused of making two deals linked to a person involved in "financing Hamas", as the occupation claims.
Despite the company's denial of the accusations against it, the case sheds light on a tumultuous battle taking place behind the scenes between the Israeli occupation and resistance movements, especially Hamas, in the cryptocurrency space, over the past years, Israel has confiscated and frozen many cryptocurrency wallets and cryptocurrencies on the grounds that they belong to the military wing of Hamas, and froze funds belonging to Gaza-based exchange companies under the pretext of transferring funds to Hamas, which ultimately led to the decision of the Qassam Brigades, the military wing of the movement, last April, to stop Receiving donations via Bitcoin.
Cryptocurrency War
In late January 2019, the Izz al-Din al-Qassam Brigades (Hamas's military wing) surprised everyone by announcing the start of receiving donations through the most popular digital currency, Bitcoin, at which time al-Qassam sent through his Telegram channel, which has 180,<> followers, announcing the start of receiving cryptocurrencies via a message that said: "Book yourself a share to support the resistance through the Bitcoin donation link."
The move was interpreted at the time as a response to Hamas's financial crisis, which prompted its military wing to resort to virtual currencies that provide high levels of secrecy as they do not contain a serial number and are not controlled by governments and central banks. Hamas resorted to this step after Gaza was suffocated by the blockade that began in 2007 and the tunnels leading to the Strip were closed in 2013, exacerbating the group's crisis by depriving it of a large financial source provided by tax income for goods that flowed into the Strip in the past. All these factors, and others, contributed to increasing the financial pressure on the movement, and made it resort to the world of cryptocurrencies.
Hamas initially asked donors to send bitcoin to a single digital address (a single wallet), but the movement quickly changed its mechanism to avoid monitoring its funding. To make tracking funds difficult, the movement developed software that generates a new digital wallet address every time a donor scans a QR code, and the battalions provided step-by-step instructions on how to send money via a two-minute video translated into English, directing donors to hide their locations and move money safely without falling into the trap of tracking.
By June 2021, as the eyes of the world were on the Gaza Strip, which had just emerged from 11 days of fighting with Israel, the Qassam Brigades had renewed its announcement to receive donations via Bitcoin. In an interview with the Wall Street Journal, a senior Hamas official expressed pride in the increase in cryptocurrency donations since the start of the armed conflict with Israel in May 2021, stressing that these donations are used in military action against the Phalange. The unnamed official said: "There is certainly a significant rise in bitcoin donations, and some of the money has been used for military purposes to defend the basic rights of Palestinians."
Less than a month after the Hamas official spoke, Israel's National Office for Combating the Financing of Terrorism (NBCTF) announced the first cryptocurrency confiscation related to alleged "terrorist financing" from wallets linked to Hamas's donation campaigns for bitcoin, Ethereum, and others. Following this operation, in which more than 70 Hamas Bitcoin accounts fell as well as other accounts, then-Defense Minister Benny Gantz* rejoiced at his institution's success in confiscating dozens of digital wallets linked to the movement, saying at the time that "the intelligence, technological and legal tools that enable us to obtain the funds of terrorists around the world constitute a clear breakthrough."
During this process, the occupation conducted an analysis using open source intelligence (OSINT) to find the addresses of Hamas donations using blockchain analysis tools, enabling it to track the funds to find the addresses of e-wallets and reveal the names of individuals associated with the campaigns. The agents then tracked and seized the money, naming two addresses that had a role in transferring the funds to the movement, one in Syria, and the other in another country in the Middle East without specifying it exactly.
Virtual blockade
The targeting of Hamas's digital cash flow began with the United States, which classifies the Palestinian resistance movement as a "terrorist organization," and Washington considers it illegal to provide the group with money or training equipment, and the designation itself requires companies and financial institutions to report any funds sent to the group.
In August 2020, the US Department of Justice carried out the largest-ever seizure of cryptocurrencies from what it described as "terrorist groups," including the Izz al-Din al-Qassam Brigades. "Agents of the IRS, the Department of Homeland Security and the FBI tracked and confiscated all 150 cryptocurrency accounts through which money laundering operations were carried out to and from the accounts of the Qassam Brigades (Hamas)," the ministry said.
In April 2023, Israel again announced that it had confiscated several accounts linked to organizations it considered "terrorist" on the cryptocurrency exchange Binance. (Shutterstock)
Americans have worked hard to regulate digital wallets so that they are not anonymous, and have even proposed holding companies accountable if digital payments to banned parties are discovered. Yet the amount confiscated by the Americans was relatively small — just over a million dollars — meaning that U.S. authorities were barely able to penetrate Hamas's encryption networks. Hamas has been able to move faster than Washington and Tel Aviv to block and dismantle its online financial network, though Israel's recent efforts have further hampered Hamas's efficiency in the cryptocurrency world.
These efforts included the establishment of a special body to track funds and donations reaching Palestinian factions in 2018, known as the Israeli National Authority for Combating Economic Terrorism, affiliated with the Ministry of Defense. By January 2022, the largest confiscation of Hamas's cryptocurrency exchange by Israel came after Israel confiscated NIS 2.6 million ($836,168) of cryptocurrencies from a Hamas-linked exchange company in the Gaza Strip called Mutahidoon, in an operation involving the Israeli army's intelligence, the Economic Counter-Terrorism Authority, the cybercrime department of the Lahav 443 Major Crimes Unit of the Israeli police, and the cyberspace unit of the State Attorney's Office. Occupation.
In April 2023, Israel again announced that it had confiscated several accounts linked to organizations it considered "terrorist" on the cryptocurrency exchange Binance, confirming the seizure of more than 80 digital accounts and hundreds of digital wallets linked to exchange companies linked to Hamas. Although the seized amount of half a million shekels ($137,870) is not a large amount, Israel considered the strike important as it helps to "cripple" the use of digital currency, while at the same time contributing to the reluctance of external entities to deal with these exchanges. About a week after that operation, al-Qassam surprised everyone by announcing that it would stop receiving funds using Bitcoin, attributing this to the movement's keenness to protect donor donors, and not to be subjected to any threat or harassment by any party seeking to intercept and confront the process of donating to the Qassam Brigades through cryptocurrencies.
The battle continues
Despite Binance's assertion that it verified users for links to terrorism, and that it "continued to invest significant resources to enhance its compliance program," Israeli accusations and actions continued to haunt it. (Shutterstock)
From the time it began its campaign against cryptocurrency wallets owned by Palestinian companies linked to Hamas, until January, Israel seized some 190 crypto accounts on the cryptocurrency and cryptocurrency exchange Binance. The confiscations put the world's largest cryptocurrency exchange by trading volumes against Israeli and U.S. accusations of failing to adhere to strict anti-money laundering and "terrorist financing" standards.
Despite the company's assertion that it verified users for links to terrorism, and that it "continued to invest enormous resources to strengthen its compliance program", Israeli accusations and actions continued to pursue it, while the occupying power pursued a policy of keeping wallets and accounts confiscated, emptying them of funds and transferring them directly to the budget of the occupation government.
Overall, it has become clear that the occupation has made great strides in recent months in enhancing its ability to decrypt and track electronic money in blockchains, making it easier to identify those who transfer cryptocurrency. Thanks to its advanced technology, Israel has been able to track the sender and receiver in various possible ways, which may be official ways through communication with governments and official bodies, or informal ways through the frequent hacking of wallet account holders and knowing their addresses and tracking them. Once the number of a Hamas wallet is known, the Israeli occupation forces will be able to know the full balance of the wallet and the operations carried out there.
However, Ashraf Mushtaha, an expert in computer and information security, believes that Bitcoin technology is very safe in terms of the possibility of transferring digital currency between any two parties directly, without the need for a third party that facilitates the transfer process, or even detects the movements of money between different parties, adding that the biggest threat is when transferring that digital money to a bank or the like, in order to exchange it for the paper currency that we trade in our daily lives, where These financial movements of each bank are monitored around the clock, through which the path of the funds can be determined, and then the source that transferred them to the bank can be determined. Mushtaha told Meydan that Hamas must rely on various other means to overcome these obstacles if it wants to continue relying on cryptocurrencies away from Israel's eyes.
Abu Harbid says that the occupation closed some wallets that did not provide assistance to the resistance, which means that the occupation found an opportunity to pirate the money of some Palestinians without even actually donating to the resistance. (Al Jazeera)
Mohammed Abu Harbid, a community security awareness specialist at the Interior Ministry in Gaza, believes that donors have already fallen under the scrutiny of Israeli and American intelligence, prompting the Qassam Brigades to abandon the project entirely so as not to endanger the lives of donors. Abu Harbid added in an interview with Medan: "The occupation paid great attention to the file of Hamas donations via Bitcoin in order to control and pirate funds under the pretext of donating to terrorism, as it closed in some cases wallets that did not provide assistance to the resistance, which means that the occupation found an opportunity to pirate the money of some Palestinians without even donating to the resistance."
Al-Ghazzawi considered that Al-Qassam at that time rushed and estimated that it was appropriate to start receiving donations via Bitcoin, and the evidence was his decline after he made sure that the negatives of this step are more than the positives. In the end, despite the great pressure from America and Israel, and the desperate monitoring to suffocate all the arteries of the economy that may help the resistance and Gaza breathe a sigh of relief, including in the field of digital currencies, keeping Hamas on this door, even if secretly, remains possible, as the movement continues to fight another battle with the occupation that is no less fierce than its military battles with it, this time on the Internet.
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Margin:
Israeli law allows the defense minister to issue confiscation orders for assets deemed "terrorism-related" by the ministry.