Blockchain forensics firm Elliptic says that the role of cryptocurrency in terrorist financing may be exaggerated.

Exaggerated Reports

In a blogpost, Elliptic, known for its expertise in blockchain forensics, contends that the scale of crypto fundraising by Hamas may not be as significant as recent reports suggest.

They argue that there's limited concrete evidence supporting the claim that terrorist organisations are using digital currencies for fundraising.

Another blockchain forensics platform, Chainanalysis, has also criticised the methodology used to estimate cryptocurrency's role in terrorist fundraising.

In the aftermath of the October 7 attacks in Israel, only $21,000 in fresh crypto donations have been received, with a substantial portion of these funds already frozen, according to Elliptic.

In contrast, Crypto Aid Israel, has received over $185,000 in crypto donations by October 19th.

This indicates that the effectiveness of cryptocurrency in raising funds for terrorist groups may be overstated.

Denied By Traceability

One reason for the limited impact of crypto fundraising is the traceability of cryptocurrency assets.

Elliptic highlights that the unique characteristics of blockchain technology make it challenging for terrorist groups to raise substantial amounts without detection.

This, in turn, restricts their ability to attract significant donations through public crypto fundraising campaigns.

The controversy emerged following claims by US lawmakers, including Sen. Elizabeth Warren, who cited a Wall Street Journal report alleging that Hamas, among other militant groups, had raised millions through cryptocurrency before attacks in Israel.

Elliptic states:

"There is no evidence to suggest that crypto fundraising has raised anything close to this amount, and data provided by Elliptic and others has been misinterpreted,"

They further clarify that they have engaged in discussions with Warren and the authors of the Wall Street Journal article to rectify the misinterpretation.

In the meantime, small crypto brokers used by Hamas and other terrorist groups have a;sp designated as terrorist organisations due to their role in financing these groups.

Hamas Bitcoin Donation Drive

Hamas initiated Bitcoin donations in 2019 but ceased all public-facing crypto fundraising activities in April, citing concerns about the safety of donors and their desire to protect them from potential harm.