The Role of Crypto in the Hamas Conflict, Making Israel Ketar-Ketir Tech – 3 hours ago

Jakarta, CNBC Indonesia – The role of cryptocurrencies in funding militant groups is under the spotlight again, following the conflict between Hamas and Israel.

Israel has reportedly confiscated crypto accounts linked to Hamas. US lawmakers have also urged the government to crack down on the use of cryptocurrencies by the Hamas group and its affiliates.

However, cryptocurrency is just one way for militant groups to raise funds to support operations.

Launching from ReutersTuesday (24/10/2023), here are some things that are known about the role of crypto in funding militant groups.

Anyone can set up a cryptocurrency wallet address, without having to undergo constant checks like banks do.

The addresses are pseudonymous, simply labeled with a series of letters and numbers meaning people can send and receive cryptocurrency without revealing their identity.

The blockchain technology underlying cryptocurrencies operates digitally and across borders, meaning it can act as an instant payment system.

Crypto globally has less specific regulations than traditional finance, although new regulations have been implemented in some regions.

The Financial Action Task Force (FATF), the global body responsible for tackling money laundering and the financing of militancy, has warned that crypto assets risk becoming a venue for the financial transactions of law-breaking individuals.

Is Crypto untraceable? Yes, but not always. Blockchains such as Bitcoin and Ethereum create permanent public records of transactions. This means you can see what funds are entering and leaving a wallet address, and which wallets are interacting with it.

It is difficult for outsiders to identify transactions on the blockchain, but blockchain analysis companies have tools to track funds.

To link these flows to a person or group, researchers rely on information that is not recorded by the blockchain.

Crypto exchanges can record which addresses belong to customers and the police can unmask the people behind the transactions.

Cryptocurrency users can further obscure their tracks by moving funds to exchanges or other companies that make those funds difficult to distinguish from other customers’ assets.

How much cryptocurrency is used in funding militant groups?

No one knows the exact number. Militant groups use a variety of methods to move money, including cash, banks, shell companies and charities, as well as informal financial networks. While crypto is a small part of it.

A UN official said in 2022 that a few years ago 5 percent of terrorist attacks were thought to be financed by crypto, however this figure may increase to 20%, Bloomberg report.

The FATF said this year that cryptocurrencies present an increased risk of terrorist financing, but that most terrorist financing still involves ordinary money.

According to crypto researcher Chainalysis, when illicit financial flows are identified in a crypto company, it does not mean that all of the company’s financial flows originate from that.

Chainalysis says that terrorist funding represents a small portion of the less than 1% of the entire crypto market occupied by illicit activity.

Terrorist financing is a small part of illegal uses of crypto, including fraud, ransomware, and theft.

Crypto crimes hit a record US$20.1 billion in 2022, calling it the lower limit of estimates. This figure does not include cryptocurrencies resulting from non-crypto crimes such as payments for drugs.

According to a UN report, cryptocurrency theft through cyberattacks is also a significant source of funding for North Korea.

Several banks in the UK have restricted customer access to crypto due to the rise in crypto fraud.

[Gambas:Video CNBC]

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