The US Justice Department (DOJ) has made a major breakthrough in disrupting terrorist financing through cryptocurrency. In a statement released on March 27, the DOJ announced that it had seized over $200,000 in cryptocurrency intended to benefit the militant group Hamas.

According to the DOJ, the seized funds were traced to fundraising addresses allegedly controlled by Hamas and used to launder more than $1.5 million in digital assets since October 2024. This laundering was carried out through a series of virtual currency exchanges and transactions, involving suspected financiers and over-the-counter brokers. The funds are currently being held in at least 17 wallets.

This is not the first time that the US government has taken action against Hamas-linked cryptocurrency activities. In January 2024, the US Treasury’s Office of Foreign Assets Control, along with corresponding organizations in the United Kingdom and Australia, announced sanctions against networks and facilitators of crypto transactions linked to Hamas. These sanctions were built upon previous US Treasury sanctions from October 2023.

In a separate incident, three families of victims of a Hamas attack against Israel filed a lawsuit against Binance and its former CEO Changpeng Zhao, alleging that the exchange had provided “substantial assistance” to terrorists. However, in oral arguments, a lawyer representing Binance claimed that the exchange had no special relationship with Hamas.

Binance has also faced scrutiny from the US government over alleged shortcomings in its Anti-Money Laundering controls. In November 2023, the exchange settled with the DOJ for $4.3 billion.

The use of cryptocurrency by terrorist organizations for fundraising has become a growing concern for the US government. Some officials have even questioned whether the industry needs more supervision or regulation to prevent such activities.

However, a report by the Congressional Research Service in December 2024 stated that the scale and effectiveness of Hamas’ cryptocurrency fundraising efforts have been unclear. Additionally, a 2023 report by Chainalysis revealed that terrorism financing accounts for a very small amount of crypto usage, with illegal groups primarily using traditional, fiat-based methods to fund their operations.

In conclusion, while the use of cryptocurrency by terrorist organizations is a cause for concern, it is important to note that it is not a widespread issue. The US government and other regulatory bodies will continue to monitor and take action against any illegal activities involving cryptocurrency.