US Treasury Disputes Crypto Funding Allegations For Hamas

The US Treasury refutes claims of significant crypto funding for Hamas, clarifying that reported amounts likely misrepresented total wallet assets, as lawmakers continued using disputed data to support crypto regulations despite objections.

Treasury Official’s Testimony

In testimony before the House Financial Services Committee, US Treasury Undersecretary for Terrorism and Financial Intelligence Brian Nelson dispelled earlier reports suggesting significant crypto funding for terrorist group Hamas. 

When questioned by Representative Tom Emmer, Nelson clarified that the reported amounts potentially referred to the total assets held in wallets, not specifically funds directed to Hamas or the Palestinian Islamic Jihad. He emphasized that terrorists still predominantly utilize traditional financial channels over digital assets.

Contradicting Reports

In October, The Wall Street Journal linked tens of millions of dollars in crypto payments to Hamas, Palestinian Islamic Jihad, and others, based on a blog post by blockchain analytics firm Elliptic. However, subsequent edits to the post revealed a misunderstanding regarding which assets actually ended up in the hands of terrorists.

Countering the WSJ’s claims, Undersecretary Nelson testified that, 

“The numbers noted in The Wall Street Journal piece talked about wallets but not necessarily the disaggregated [amount] among the wallets customers.”

WSJ Revises Reported Numbers

Following scrutiny, The Wall Street Journal revised its report, which had earlier claimed that Palestinian Islamic Jihad and Hamas received $93 million and $41 million, respectively, between August 2021 and June 2023. The publication revised its figures to claim that the Palestinian Islamic Jihad group received $12 million after being contested by Elliptic, which asserted there was insufficient evidence to support such substantial crypto fundraising.

Data Misuse in Legislation

Despite corrections, lawmakers such as Senators Sherrod Brown (D-Ohio) and Elizabeth Warren (D-Mass) continued to reference the initial erroneous figures to advocate for stringent regulations on the crypto industry under the pretext of national security.

Expressing concern over the misuse of data in legislative discussions, Representative Emmer urged the Treasury to formally correct the record regarding the relationship between digital assets and terrorism. He emphasized the necessity of accurate information in policymaking processes.

While addressing the committee, Nelson reiterated the government's commitment to disrupting terrorist financing through digital assets. He stressed the need for additional tools and resources to combat illicit finance within virtual asset markets and forums and expressed eagerness to collaborate with Congress on this front.

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