It has been more than three weeks since Hamas, a terrorist organization, launched a bloody assault on Israeli civilians. This has led to greater escalations between Hamas militants and the Israeli military, exacerbating a political crisis long faced by the Palestinian people.
Civilian casualties continue to mount amid a humanitarian crisis for Gaza’s residents and the looming prospect of a destructive Israeli ground offensive.
This is but the latest development in a long history of crises affecting the Palestinian and Israeli people, catalyzed by the actions of Hamas militants and escalating tensions in the Levantine region and greater Middle East. The current situation risks unfolding into a broader conflict between Israel and its neighbors, with rhetoric and provocations abound from many interlocutors including the Islamic Republic of Iran and their regional allies; plus the allies of Israel from the United States, United Kingdom, and France.
At the heart of these latest developments have been a growing number of inquiries about the role that crypto assets have played in supporting and enabling Hamas, both before the bloody and heinous acts of October 7, 2023, and in sustaining their operations until now.
This question highlights the current issues with donations for the latest conflict in Gaza. There are many humanitarian calls to support those innocent people who have been affected by the fighting, but equally so this opens lines to abuse and even fuelling the conflict further.
Israel has a strong history of countering terrorism financing; exploits of its Task Force ‘Harpoon’ created by the late Meir Dagan, a celebrated figure and former head of the Israeli Intelligence Service “Mossad” are among the stuff of legend in Counter Terrorism Financing circles.
From defrauding senior militants with bogus investments to suing individual donors to terrorist organizations, the rationale was clear – take money from Israel’s enemies and they will lose the ability to operate.
In line with this ethos, recently the Israeli government issued a raft of sanctions against crypto asset addresses believed to be involved in terror financing.
Of these humanitarian fundraisers was a service now designated by the US Government’s Office of Foreign Assets and Control (OFAC) called ‘BUY CASH’. Though designated by the US on October 18, it had been long designated by the Israeli National Bureau for Counter Terror Financing (NBCTF) on June 30, 2021.
BUY CASH is a currency exchange service located in Khan Yunis, Gaza. Since removed but available on archive.org, its website is in keeping with many other money exchange services across the wider Middle East. It doesn’t have a login page or price ticker, instead it offers a nondescript list of currency trading pairs, and contact telephone numbers.
Above: Exterior view BUYCASH, Khan Yunis (source: Facebook)
Above: Inside BUYCASH, Khan Yunis (source: Facebook)
The two Bitcoin addresses supplied for BUY CASH suggest that it had substantial business – during its activity period, between Oct 20, 2015 and May 15, 2022, 3515 BTC was sent and received by these addresses.
Above: The number of transfers sent and received by BUYCASH Bitcoin addresses between October 20, 2015 – May 15, 2022 (source: Crystal).
The above graph also suggests it was no longer operational – at least for those addresses – since 2022. In comparison, it there were 11,382 transactions during its activity period from October 20 2015 – May 15. 2022.
Above: A visualisation of the kinds of entities, and their risk levels, that interacted with BUYCASH (source: Crystal).
The top identified sending destinations for funds from BUYCASH were BTC-e, HashOcean, Xapo and Uphold (formerly Bitreserve), and the top receiving destinations were Binance, Bitstamp and Poloniex.
Not much. In fact, it tells us nothing about them at all. Binance, Bitstamp and Poloniex are all well-respected Exchanges, but they are international companies so we cannot infer a location for the funds that were sent if you wanted to suggest some state-level sponsorship or collusion.
Even if you could infer location information from this so, it is doubtful that the account sending the transaction would be onboarded as ‘Charity support for Hamas’.
More importantly, we are not able to determine what happened after the trade took place – if the funds were converted into fiat, or any other crypto asset. We are very good at seeing the ‘raise’, ‘store’, and ‘move’ – but we cannot tell the ‘spend’.
In reality, the only agencies who are able to tell what is happening ‘behind the scenes’ are the intelligence and security agencies who may have access to additional information, quite often with extensive resources, about these service providers.
And in this, we must be careful not to overstate what is possible with Blockchain Analytics. We are another source in the overall intelligence picture, and our reliability and credibility should be carefully examined.
As a blockchain analytics firm with multi-lingual intelligence and research teams located across the globe, Crystal is in a unique position to piece together any related blockchain activity in the run-up to October 7 and build up a picture of how the situation developed.
We make it our job to collect information about cryptocurrency exchanges, wallets, transactions, and any potential illicit activity from a wide number of public and trusted sources. To date, we’ve collected information about more than 48,000 entities with millions of addresses identified. We have a lot of information – from small-scale Peer-to-Peer Exchange Services in Yemen to gambling websites in Southeast Asia.
That said, it is worth noting that despite blockchain’s reputation for being traceable, with analytics tools such as Crystal playing an integral role in helping enforcement agencies track the flow of funds across multiple blockchains and through thousands of exchanges, cryptocurrencies are not completely transparent. This poses a particular challenge when examining contributing factors to events such as terrorist attacks.
To learn how Crystal can help transform your approach to crypto compliance, book a demo here.
Click here to read Terrorism funding: Why terrorism finance is tricky?