On October 10, three days after the brutal onslaught by Hamas and other Gazan terror groups against Israel, the cyber branch of the Israel Police froze several cryptocurrency accounts belonging to Hamas, after the terror group attempted to raise money on social media in the immediate aftermath of the assault.

Hamas and Palestinian Islamic Jihad (PIJ) have attempted to fundraise via cryptocurrency since at least 2019 in search of money outside the most common channels for financial transfers. The groups are designated as terrorist organizations in Israel, the US and throughout the Western world, and therefore have restricted access to the international banking system.

Since 2021, Gaza terror groups are estimated to have raised over $130 million in cryptocurrency — around $41 million by Hamas and $93 million by Palestinian Islamic Jihad.

Most of the international funding for the Gazan terror groups comes from Iran, which has sponsored Hamas with some $100 million annually and the PIJ to the tune of tens of millions, according to Defense Minister Yoav Gallant.

Hamas has also received over $1.5 billion in disbursements from Qatar over the past decade. The funds are officially aimed at covering salaries for public workers, fuel purchases and transfers to poor families, but the terror group deducts part of the payments and keeps it for its own operations.

Cryptocurrencies such as Bitcoin and Ethereum have become an important fundraising channel for illicit activities and terror groups in recent years, since they allow the swift transfer of money around the world, bypassing banks through digital wallets.

Hamas’s military arm, the al-Qassam Brigades, began soliciting Bitcoin donations in 2019, first on its Telegram channel and later directly on its official websites, according to the US Department of Justice. Hamas boasted that Bitcoin transfers were “untraceable” and would be “used for violent causes,” and its websites published video instructions on how to make anonymous donations.

The following year, the US Department of Justice announced it had managed to track and seize 150 cryptocurrency accounts that funneled money to the al-Qassam Brigades. The US also issued search warrants against donors based in the US. Two Turkish men living in the US were criminally prosecuted for acting as money launderers for the terror group.

Israeli authorities have also been active in tracking crypto funds funneled to Hamas. Israel’s National Bureau for Counter Terror Financing (NBCTF) has seized dozens of cryptocurrency wallets affiliated with Hamas in recent years, valued at tens of millions of dollars, according to the financial analytics firm TRM.

Israeli authorities intervened to halt the money flow following a spike in crypto donations to the al-Qassam Brigades during the Guardians of the Wall operation against Hamas in May 2021.

Before then, the terror group had only collected crypto donations totaling a few thousand dollars, but in 2021 alone, Israeli authorities blocked $7.3 million contained in digital wallets linked to Hamas, holding funds in Bitcoin, Tether, Ethereum, Tron and Dogecoin, according to Elliptic, a blockchain forensics firm.

Hamas’s fundraising efforts have grown in sophistication and complexity over time, as law enforcement authorities have stepped up their tracking efforts.

Following further seizures by the Israeli government, Hamas and other Gaza-based terror groups stopped publishing the address of their cryptocurrency donation wallets and instead turned to online payment processors that allow supporters to make payments through a link and obscure the true cryptocurrency wallet, according to the Wall Street Journal.

As it turned away from the direct donation system, the al-Qassam Brigades announced in April that it would stop raising funds using Bitcoin, citing intensifying “hostile” activity against donors.

The terror group raised around $41 million between 2021 and 2023, according to an estimate by the crypto analytics software BitOK quoted in the Wall Street Journal.

As for the other two main Iran-sponsored terror groups on Israel’s border, the NBCTF announced in July that it had seized dozens of wallets linked to the PIJ and Hezbollah, in what TRM described as the largest terror-related cryptocurrency seizure in Israel.

The PIJ-linked wallets received as much as $93 million in cryptocurrency between August 2021 and June this year.

In light of the support for Israel declared by all major Western countries in its fight against Hamas following the October 7 onslaught, it can be expected that international efforts will increase to limit the use of cryptocurrencies for terrorist financing, Elliptic analysts said. On October 18, the Biden administration announced new sanctions that targeted ten Haman members, as well as a Gaza-based cryptocurrency exchange.

Israeli authorities are also calling for a crackdown on fundraising campaigns for Gaza for ostensible humanitarian purposes. Following the start of the war, the NBCTF reported a “significant increase in the scope of online crowdfunding campaigns​,” and published a list of 11 ongoing fundraising campaigns for Palestinians that it considers to be affiliated with Hamas.

The list includes campaigns launched by Muslim charities based in Qatar, Kuwait, Turkey and in the West, which collect donations by credit card, Google Pay and other mainstream online payment methods.