LONDON—Global cryptocurrency provider Tether and the American government could have seized at least $10 million in crypto from Hamas, compared to just over $200,000, which was actually recovered last month.
The US department of justice seized the USDT equivalent of $201,400 in March from terrorist organisation Hamas, according to a statement.
The move came after repeated prompting by Rich Sanders, an independent researcher who has co-founded a cryptocurrency analysis startup and is a volunteer with the Ukrainian defense intelligence forces, he told Reporter in an exclusive interview.
Sanders has seven years of experience discovering virtual currency funds linked to fraud, organized crime and global terrorism, as well as Russian sanctions evasion and sabotage operations.
Sanders was one of the key researchers exposing sanctioned Russian cryptocurrency exchange Garantex, whose affiliates were charged by the US in March this year.
Reporter saw emails and screenshots confirming that he alerted US authorities and Tether, as well as major blockchain services firms, to the presence of Hamas funds on their networks.
Sanders slammed both the crypto industry and the US enforcement agencies for not following up on his initial alerts, noting that violations continued happening in plain view and from the same initial source.
“To call that an oversight is an understatement,” he said. “It’s literally just a matter of sending an email to “fund at Al-Qassam,” which means that nobody between September and February decided to do that.”
Expressing frustration that such obvious gaps in supervision are all too common, the analyst pointed to a “dilution of responsibility” between the industry and the government, both of which expected the other side to do the basic work of investigating terrorism financing and other illegal transactions.
Tether had USDT worth $144 billion in circulation as of April 11, according to its official website. USDT is a so-called stablecoin backed by US dollars on a 1:1 basis, the company says.
“Tether reports credible leads to law enforcement and has a track record of successfully freezing illicit funds upon the request of law enforcement. We welcome leads from professional forensics companies and will forward leads for the consideration of relevant law enforcement agencies. Tether’s support of law enforcement sets the benchmark for the industry. Examples of our enforcement actions can be found here https://tether.io/news/,” said a Tether spokeswoman in response to a request to comment.
A US Department of Justice spokeswoman said “We have no additional comment beyond the press release published in late March.”
In that press release, U.S. Attorney Edward R. Martin Jr. for the District of Columbia was quoted as saying: “These seizures show that this office will search high and low for every cent of money going to fund Hamas, wherever it is found, and in whatever form of currency,” adding that “Hamas is responsible for the death of many U.S. and Israeli nationals, and we will stop at nothing to stop their campaign of terror and murder.”
Hamas is a banned terrorist organization in the US and most other Western countries. Funding it by any means is a criminal offence.
Reporter saw an email from September 2024 in which Sanders notifies a blockchain analysis firm of terrorist finance on the Tether platform. Yet he says nothing had been done to follow up until February, when he contacted the FBI directly about the continuing activity of the same Hamas fundraising account.
Asked what amount could have been seized if either Tether or the US authorities had monitored Hamas fundraising from September, when his initial alert was made, he said: “I think it’s fair to say $10 mil plus, conservatively, within that time frame,” the analyst said.
The Telegram channel where the call for funding was discovered shows similar appeals for crypto donations in support of Hamas as early as March 2024.
A separate email from February seen by Reporter shows an anonymous Gmail account interacting with an email address from the Al-Qassam Brigades, a Hamas affiliate, soliciting donations to a USDT [Tether] wallet.
The same wallet address features in the FBI affidavit published by the US Department of Justice following the seizure.
Sanders took issue with claims that Tether and the US authorities are being proactive in chasing terrorism finance in crypto, saying:
“My message to Tether is that every other VASP [virtual asset service provider] I have contacted in the course of this investigation has taken an action,
such as freezing an account or holding funds received with irrefutably evidenced Hamas wallet addresses,” said Sanders. “It is inappropriate, inexcusable, and the opposite of proactive to require a court order and then a three-day holding period on top of that for them to do an internal review.”
“Cryptocurrency transactions happen quickly. Requiring legal process that (which, if one was truly proactive and doing this sort of work, one would know) can not happen at the pace of these transactions is not proactive; it’s facilitating terror financing,” he added over email after the initial interview.
Sanders said that typically funds are moved out of wallets within 12 hours to external providers, often in uncooperative jurisdictions.
As of April 11, Hamas had another USDT wallet openly collecting donations online, according to another Al-Qassam email seen by Reporter.