Shurat HaDin is threatening Coinbase with legal action over revelations that Palestinian terrorist organization, Hamas, is using the cryptocurrency exchange’s platform to receive Bitcoin donations. The Israeli legal NGO says Coinbase should be aware that any financial dealings with Hamas constitute a criminal breach akin to trading with the enemy.
Bitcoin Trading With the Enemy
According to JewishPress.com, Nitsana Darshan-Leitner, founder of Shurat HaDin wrote a letter to Brian Armstrong, the CEO of San Francisco-based Coinbase. In the letter, Darshan-Leitner pointed to the recent revelation of Hamas having an account with Coinbase through which the group receives donations in the popular cryptocurrency.
The Shurat HaDin founder called on the Bitcoin exchange behemoth to cease or dealings with Hamas or risk legal action. An excerpt from the letter reads as follows:
“I am writing to notify Coinbase that knowingly providing material support or resources to Hamas is a violation of US federal criminal law and to demand that Coinbase immediately terminate any and all accounts and services provided to Hamas. The provision of such support could render your company both criminally and civilly liable under America’s Anti-Terrorism law.”
Darshan-Leitner also encouraged Coinbase to acquaint itself with the list of designated terrorist organizations to be in compliance with both U.S. and international law concerning terrorist organizations. The U.S., Israel, and the European Union consider Hamas to be a terrorist organization.
For Darshan-Leitner, the group being able to raise funds via Bitcoin donations on its Coinbase accounts significantly diminishes Shurat HaDin’s ability to cut-off funding for Hamas. According to the founder, the team at the NGO has in the past succeeded in freezing billions of dollars belonging to the terrorist group.
Hamas Turning to Bitcoin
With such difficulties in raising funds via conventional channels, reports suggest that Hamas is increasingly turning towards the dark web and cryptocurrencies like Bitcoin. For one, virtual currencies operate outside the ambit of mainstream finance as such transactions do not require banks or clearing houses.
Earlier in February 2019, reports emerged showing Hamas calling for Bitcoin donations to facilitate their operation. According to Whitestream, an Israeli blockchain intelligence firm, Hamas was at the time, successfully funneling money using Bitcoin on its Coinbase account.
Findings revealed by the report showed a couple of Bitcoin addresses believed to belong to the terrorist group, holding a total of $2,500. Investigations into transactions from the addresses show links to wallets in other platforms like Binance and Russian-based Vilkov.
Cryptocurrency and Terrorism
A lot of concerns surrounding Bitcoin and other cryptocurrencies stem from the belief that they can be utilized by money launderers, tax evaders, and terrorist organizations. The report that a group like Hamas was able to raise $2,500 in Bitcoin donations may play into those same fears.
However, while covering the story, investigators admitted that terrorist fundraising via cryptocurrencies still amounts to a statistically insignificant sum. Whitestream’s Itsik Levy commenting on the matter, said:
We [Whitestream] have been decoding blockchain transactions for a long time. According to our figures, only 2 percent of total bitcoin turnover involves the darknet or is related to terrorist or criminal activity.
These comments tally with what many experts say about terrorist financing via cryptocurrencies. Back in September 2018, Blockonomi’s reported that cash is still king for terrorist group as Bitcoin and other cryptos constituted poor money for jihadists. For one, these groups tend to operate in technologically disenfranchised locations, making the conversion of cryptocurrency to fiat an arduous task.