Blockchain forensics company Elliptic has raised red flags about misleading information circulating regarding crypto fundraising by Hamas. Contrary to wide-ranging beliefs, Elliptic’s research suggests that fundraising through cryptocurrencies for this group has been significantly less than what’s commonly reported. Moreover, the firm states that much of the funding collected has already been frozen.
Elliptic reported that Hamas had ceased all crypto fundraising endeavors in April due to concerns over donor safety. Additionally, following the attacks in Israel on October 7, only $21,000 in new crypto donations were recorded. According to Elliptic, the figures being touted fail to reflect the actual scope of the problem. The firm emphasizes that digital currencies have so far proven to be a less successful fundraising tool for terrorist organizations compared to other methods.
Flawed metrics and data misinterpretation
This topic gained widespread attention after a group of over 100 U.S. lawmakers, including Senator Elizabeth Warren, cited a Wall Street Journal report. The report claimed that Hamas and other militant groups had raised millions in cryptocurrencies. Elliptic asserts that data provided by them and other analytics firms has been misunderstood or misused. They have directly communicated their findings to Senator Warren and the authors of the original Wall Street Journal article. Significantly, Elliptic isn’t alone in this stance.
Another crypto analytics company, Chainalysis, also challenges the existing narrative. The firm suggests that some reports are likely overstating metrics and relying on “flawed analyses.” Chainalysis points out that although terrorist organizations may use cryptocurrencies, they represent an extremely small fraction of illicit transactions within the digital currency world. Hence, it may be premature to place cryptocurrencies at the center of discussions about financing for unlawful activities.
Other financing mechanisms remain prevalent
Adam Zarazinski, CEO of the crypto-focused data analytics company Inca Digital, recently testified before the House Financial Services Committee. He stated that while cryptocurrency has its risks, it also offers advantages like financial inclusion and economic growth on a global scale. Traditional financing mechanisms such as financial institutions, hawalas, and shell companies continue to be the primary vehicles for illicit fundraising. Consequently, it’s essential to exercise caution when assigning the blame to digital currencies without substantial evidence.
The report from Elliptic comes at a crucial time when legislative bodies and the public are grappling with the complexities of digital currencies. While it’s essential to remain vigilant about the potential misuse of these financial tools, it’s equally vital to approach the subject with a nuanced understanding. Misrepresentations and flawed metrics serve neither the cause of effective governance nor public understanding. Thus, accurate and unbiased reporting becomes the need of the hour to ensure that facts triumph over fear.