U.S. Senators Sent Letter to White House Over Crypto Terror Funding

A bipartisan group of 105 U.S. lawmakers, led by Senators Elizabeth Warren, Roger Marshall, and Representative Sean Casten, wrote to the U.S. Treasury Department and the White House, voicing their “grave concern” about Hamas and its affiliate, the Palestinian Islamic Jihad, using crypto to fund operations and circumvent U.S. sanctions.

A Letter to The White House

The letter urged decisive action against crypto illicit finance risks to prevent its use in funding harmful acts. It cited news reports about Hamas’s use of crypto to fund its brutal attacks on Israel.

The letter urged prompt action against such activities and posed nine questions to the Biden administration. These questions seek information on terror financiers, the steps being taken against crypto’s use in funding terrorism, and any additional resources required by the administration.

Treasury Secretary Janet Yellen pledged continued efforts to block Hamas from accessing and using funds for terror activities. On October 10, Israeli police reported freezing several cryptocurrency accounts linked to Hamas donations. Since 2021, Israel has confiscated about 190 crypto accounts on Binance, with some allegedly linked to Palestinian companies associated with Hamas.

“We will continue to take all steps necessary to deny Hamas terrorists the ability to raise and use funds to carry out atrocities and terrorize the people of Israel.”

Binance stated its collaboration with global counter-terrorism authorities regarding these seizures. Hamas reportedly uses a global finance network, including crypto, to receive support. The lawmakers have sought details from the Biden administration on the extent of Hamas’ cryptocurrency assets and their role in its financing.

Warren Doubles Down in WSJ Article

Warren added in an article published in the Wall Street Journal, that in the two years preceding the attack, cryptocurrency wallets associated with Hamas and the Palestinian Islamic Jihad reportedly received over US $130 million ($206 million), highlighting the significant role of crypto in financing terror groups.

According to Warren, this financing underscores the vulnerabilities in monitoring international financial transactions. Crypto is increasingly being used by terrorists, rogue states, and other criminals, jeopardising U.S. national security and its allies. Similar regulations for anti-money-laundering that apply to traditional financial sectors should be applied to crypto, Senator Warren argued.

“Congress and this administration must take strong action to thoroughly address crypto illicit finance risks before it can be used to finance another tragedy.”

Bad Actors Use Crypto

Terrorist groups solicit cryptocurrency donations openly, and countries like Iran reportedly amass around US $1 billion ($1.6 billion) in crypto assets annually. Additionally, entities such as Hezbollah and Iran’s Islamic Revolutionary Guard Corps have had their crypto assets confiscated.

According to Warren, the existing voluntary rules have proven insufficient in preventing cryptocurrency crime, which exceeded US $20 billion ($31.7 billion) in illicit transactions last year. All financial institutions in the U.S. adhere to basic compliance measures, and crypto entities should be no exception, she wrote.  

The Senator emphasised the introduction of the Digital Asset Anti-Money Laundering Act, aimed at integrating cryptocurrency into the regulatory framework of traditional payment systems, to curtail the financing of groups like Hamas.