How Crypto Funded The Hamas War

Pivot to digital currencies helped Hamas receive large sums from Iran in the two years preceding the Israel attacks

- Angus Berwick

In mid-2019, Israel’s military used a precision strike on a narrow street to kill a Hamas commander whom it called Iran’s money man in Gaza.

The commander ran an off-the-books system of remittances in which trusted agents shuttled physical cash and goods across borders to settle customers’ balances. This so-called hawala network, as it is known in the Middle East, funneled tens of millions of dollars in financing from Iran to Hamas’s military wing.

His replacement, a Palestinian businessman called Zuhair Shamlakh, changed strategy to evade the Israelis: He turned to digital currencies.

Shamlakh’s money exchanges increasingly sent digital tokens to operators abroad to settle hawala balances, according to current and former Israeli law-enforcement officials along with former U.S. officials. Crypto sent to the digital wallets controlled by the Hamas-affiliated money exchanges could also be swapped for cash at their offices in the Gaza Strip.

This pivot helped Hamas and affiliates such as Palestinian Islamic Jihad to receive large sums from Iran during the two years that preceded the attacks on Israel in October, the officials said. It was an attempt to use a new financial technology to lessen the risks of moving physical money and goods.

Since 2021, Israel’s National Bureau for Counter-Terror Financing (NBCTF) has issued seven orders to seize crypto funds held by three of these Gazan exchanges.

Digital wallets identified by the NBCTF in two of these orders as being connected to the exchanges had received $41 million in crypto, according to research by Tel Aviv-based analytics and software firm BitOK. Wallets linked by the bureau in another order to PIJ have received a further $93 million.