KEY POINTS
- Undersecretary Nelson said the Treasury assessed terrorists still prefer "traditional" financing methods
- He said the department assessed digital assets weren't a "popular tool" for Hamas or its ally, PIJ
- The October 10 report by WSJ revealed that PIJ received up to $93 million in crypto between August 2021 and June 2023
The U.S. Treasury Department on Wednesday said cryptocurrencies played only a small part in the financing of terrorist activities by Palestinian militant group Hamas and its ally, the Palestinian Islamic Jihad (PIJ).
The revelation comes after The Wall Street Journal reported in October, at the peak of the fighting in the Gaza Strip, that Hamas and PIJ received up to $41 million and $93 million in crypto, respectively, between August 2021 and June 2023.
"The numbers noted in The Wall Street Journal piece talked about wallets but not necessarily the disaggregated [amount] among the wallets of customers," Brian Nelson, the Treasury's Undersecretary for Terrorism and Financial Intelligence (TFI), told lawmakers during a Wednesday House Financial Services Committee hearing.
Today, I asked Treasury's Head of FinCEN and OFAC about the WSJ's reporting on Hamas's digital asset fundraising campaign.
— Tom Emmer (@GOPMajorityWhip) February 14, 2024
Undersecretary Nelson CONFIRMED, on the record, that the WSJ's numbers were inaccurate and that crypto was not even a popular tool for Hamas terrorists. pic.twitter.com/Y2nSJfe3Lk
When pressed for further clarification by Rep. Tom Emmer, R-Minn., regarding the reported amounts that "people had in their wallets as opposed to what was specifically going to the" militant groups, Nelson said the Treasury thinks it is "most likely."
"We also assess that terrorists still prefer, frankly, to use traditional [financial] products and services, but this is something that we are obviously monitoring very closely," he added.
Emmer then asked Nelson how much in crypto the Treasury thinks went into the hands of Hamas and PIJ, Nelson said the department doesn't expect the numbers to be "very high." He said he would be glad to discuss the exact numbers in private.
The GOP Majority Whip further asked if the Treasury believes that "digital assets were not even a popular tool for Hamas or the Palestinian Islamic Jihad," Nelson said, "that's our assessment, yeah."
In the WSJ article titled "Hamas Militants Behind Israel Attack Raised Millions in Crypto" that was published three days after the Oct. 7 massacre in Israel, the news outlet cited blockchain analytics solutions provider Elliptic, which said PIJ-linked wallets that were seized by Israel's counter-terrorism unit had $93 million during the mentioned period.
Elliptic has since clarified that there is "no evidence to support the assertion that Hamas has received significant volumes of crypto donations." The crypto analytics firm said it has engaged with WSJ "to correct misinterpretations of the level of crypto fundraising by Hamas."
WSJ partially corrected the article, saying the PIJ and Lebanon-based terror group Hezbollah "may have exchanged up to $12 million in crypto since 2021, according to crypto-research firm Elliptic." It also said it has updated other parts of the report to include "additional context" on Elliptic's research.
Following the hearing, Emmer said senators were drawing up legislation based on the "inaccurate reporting" of WSJ, seemingly referring to the proposed Digital Asset Anti-Money Laundering Act (DAAMLA) introduced by senators Elizabeth Warren, D-Mass., and Roger Marshall, R-Kan.
Senators are writing legislation based on the Wall Street Journal's inaccurate reporting. Since Treasury has accurate data, it has an obligation to correct the record on the size of Hamas's digital asset fundraising efforts.
— Tom Emmer (@GOPMajorityWhip) February 14, 2024
The said proposed legislation seeks to place crypto firms under anti-money laundering policies, but it has since been met with uproar, specifically among crypto and blockchain companies, and former national security and military professionals.
