Inaccurate Metrics and Flawed Analyses
Chainalysis, a blockchain forensics firm, has addressed the issue of overstated metrics and flawed analyses in recent reports about terrorist groups like Hamas, Hezbollah, and the Palestinian Islamic Jihad using cryptocurrency. While acknowledging that some terrorist organizations do utilize crypto for fundraising and financial transactions, Chainalysis emphasizes that terrorism financing is only a small fraction of the already small illicit crypto volume.
Terrorism financing is a very small portion of the already very small portion of cryptocurrency transaction volume that is illicit.
According to Chainalysis, terrorist organizations primarily rely on traditional fiat-based methods such as financial institutions, hawalas, and shell companies for their financing needs. The inherent transparency of blockchain technology also makes it less suitable for illicit activities.
The Role of Service Providers
The article discusses the involvement of service providers in these transactions, highlighting the case of Buy Cash, a Gaza-based business that offers money transfer and crypto exchange services. The U.S. Treasury Department recently sanctioned Buy Cash for its alleged involvement in facilitating illicit activities.
Chainalysis examined a wallet connected to terror financing and identified around 20 suspected service providers among its counterparties. Notably, eight of these service providers were found to have transacted with Garantex, a Russian exchange that reportedly facilitated money transfers for Gaza groups.
However, Chainalysis cautions against drawing inaccurate conclusions by solely tracing through service providers. When individuals send crypto to an address used by a service provider, the funds are often pooled and mixed with those of other users on the platform.
Hot Take: Crypto’s Limited Role in Terrorism Financing
Contrary to exaggerated claims, Chainalysis clarifies that terrorism financing through cryptocurrency is a small part of an already tiny illicit crypto volume. Traditional methods like financial institutions remain the primary choice for terrorist organizations.
By
By
By
By
By