Unlocking the Crypto Clarity: Debunking Myths and Realities

Elliptic, a prominent blockchain forensic company, has released a recent statement that vehemently disputes the notion that Hamas is purportedly receiving substantial cryptocurrency donations for its activities against Israel. In their official statement, dated October 25, Elliptic firmly emphasizes that there is, unequivocally, no concrete evidence supporting the rather bold claim of significant cryptocurrency donations going into the coffers of Hamas. According to the firm, the funds raised through cryptocurrencies remain, in relative terms, quite modest.

This particular declaration by Elliptic is issued in direct response to a series of recent articles and letters that have appeared in various media outlets, notably The Wall Street Journal, as well as communications from U.S. lawmakers. The heart of the matter revolves around Elliptic's assertion that these sources have fundamentally misinterpreted data, ultimately leading to the erroneous suggestion that cryptocurrency plays an outsized and central role in financing Hamas' alleged "terrorist" actions.

To provide a tangible example of this, Elliptic points to a noteworthy cryptocurrency fundraising campaign associated with Hamas, conducted by Gaza Now, a well-known pro-Hamas news outlet. Since the rather dramatic Hamas attack on Israel on October 7, this campaign has managed to raise just a rather paltry $21,000, which, when viewed in the broader context, is indeed quite small.

Out of this sum of $21,000 that was collected, $9,000, approximately half, was frozen by the stablecoin issuer Tether. An additional $2,000 found itself in the realm of freezing when it was transferred to a cryptocurrency exchange, presumably earmarked for conversion into traditional fiat currency, as astutely pointed out by Elliptic.

Setting the record straight on crypto crowdfunding by Hamas https://t.co/1tZrE1C43V

— Elliptic (@elliptic) October 25, 2023

Furthermore, it's worth noting that Elliptic has made earnest attempts to rectify a rather glaring error in an initial statement by The Wall Street Journal. The initial statement, audaciously claiming that Hamas and Palestinian Islamic Jihad had, rather astonishingly, raised over $130 million in cryptocurrency between the comparatively short time span from August 2021 to June 2023, was subsequently adjusted in a later update on October 10. The revised figure now stands at a more circumspect "as much as $93 million."

This Wall Street Journal article, which underwent this rather substantial amendment, was cited in a letter authored by none other than the distinguished Senator Elizabeth Warren, accompanied by more than 100 of her esteemed colleagues in the U.S. Congress. In their missive, they argued that cryptocurrencies, in their current state, indeed pose a "national security threat" to the United States and its valued allies. Consequently, they pressed for a comprehensive and forceful approach to address potential risks associated with the use of cryptocurrencies in facilitating illicit activities.

However, in a firm and unyielding tone, Elliptic reiterates that the data, despite the surrounding buzz and rhetoric, was fundamentally and categorically misinterpreted: "Over the past fortnight, politicians and journalists have painted public crypto fundraising as a substantial wellspring of funds for Hamas and other extremist groups. Regrettably, the data simply does not lend itself to this narrative."

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~20% of US Congress signed a letter based on incorrect facts. Elliptic just corrected the facts. Will @WSJ & the ~20% of Congress correct their statements now?@nic__carter, thank you for demanding truth here, and holding power accountable for misstatements of fact ???? https://t.co/TazXQnjjgW

— Caitlin Long ????⚡️???? (@CaitlinLong_) October 25, 2023

On October 18, Chainalysis, an equally distinguished blockchain forensics firm, took to the public sphere by posting a blog. In this blog post, they endeavored to provide much-needed clarity on various misconceptions that were, somewhat curiously, circulating within the media. One specific cryptocurrency wallet, which had attracted the spotlight of the media, was said to have received a rather staggering $82 million over a span of seven and a half months. Chainalysis, in its characteristic analytical fashion, astutely pointed out that only a modest $450,000 from this sum was traced to a wallet that had a known association with terrorist activities.

Additionally, it's interesting to note that Elliptic, in its ongoing role as a vigilant observer, pointed out that back in April 2023, Hamas chose to suspend its cryptocurrency fundraising endeavors, particularly through the use of Bitcoin (BTC). The stated reason behind this suspension was their "concern about the safety of donors and to spare them any harm."

Notably, in the year 2021, the National Bureau for Counter Terror Financing in Israel commenced the issuance of seizure orders for cryptocurrency wallets that were linked to Hamas. This involved a close working relationship with cryptocurrency exchanges to freeze accounts believed to be associated with the organization.

All of these aforementioned developments, according to Elliptic's analysis and interpretation, tend to suggest that cryptocurrency, while it might have some utilization, does not necessarily represent an optimal means for terrorism fundraising. This perspective hinges on the critical factor of transparency within blockchain technology, which, more often than not, allows for the traceability of illicit funds, occasionally even leading to the identification of real-world individuals behind these transactions.

It is important to note that, despite efforts, Elliptic has not received an immediate response from The Wall Street Journal for comment on their refutation.

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