October 18, 2023

Washington, DC— U.S. Senator Joe Manchin (D-WV) and 104 of his colleagues sent a bipartisan, bicameral letter to National Security Advisor Jake Sullivan and Brian Nelson, Under Secretary for Terrorism and Financial Intelligence at the U.S. Department of the Treasury, raising grave concerns about reports that in the months leading up to their brutal October 7th terrorist attack on Israel, Hamas and Palestinian Islamic Jihad (PIJ) raised millions of dollars via crypto, evading U.S. sanctions to fund their operations. The lawmakers are asking the Biden Administration to provide information about how it plans to prevent crypto-financed terrorism. 

“Between August 2021 and this past June, [Hamas and PIJ] raised over $130 million in crypto, and moved millions among each other, ‘with PIJ sending over $12 million in crypto to Hezbollah since 2023.’ As the Wall Street Journal reports, ‘[r]esearchers who study Hamas’s financing said crypto remains one of a number of tools the group uses to raise funds.’ Given the clear and present danger posed by the financing of these and other militant organizations, we ask the Administration to provide additional details on its plan to prevent the use of crypto for the financing of terrorism,” the lawmakers wrote. 

“That the deadly attack by Hamas on Israeli civilians comes as the group has become ‘one of the most sophisticated crypto users in the terror-finance domain’ clarifies the national security threat crypto poses to the U.S., and our allies. Congress and this Administration must take strong action to thoroughly address crypto illicit finance risks before it can be used to finance another tragedy. As Congress considers legislative proposals designed to mitigate crypto money laundering and illicit finance risks, we urge you to swiftly and categorically act to meaningfully curtail illicit crypto activity and protect our national security and that of our allies,” the lawmakers continued. 

Earlier this year, Senator Manchin introduced the Digital Asset Anti-Money Laundering Act, bipartisan legislation that would mitigate the risks that digital assets pose to our national security by closing loopholes and bringing the digital asset ecosystem into greater compliance with the anti-money laundering and countering the financing of terrorism (AML/CFT) frameworks governing the greater financial system.

Read the full letter below or here.

Dear Under Secretary Nelson and Mr. Sullivan:

We write to express our grave concern regarding reports that, in the months leading up to their brutal and horrific October 7th attack on Israel, Hamas and Palestinian Islamic Jihad (PIJ) raised

millions of dollars in crypto – evading U.S. sanctions and funding their operations. Indeed, between August 2021 and this past June, the two groups raised over $130 million in crypto, and moved millions among each other, “with PIJ sending over $12 million in crypto to Hezbollah since 2023. As the Wall Street Journal reports, “[r]esearchers who study Hamas’s financing said crypto remains one of a number of tools the group uses to raise funds.” Given the clear and present danger posed by the financing of these and other militant organizations, we ask the Administration to provide additional details on its plan to prevent the use of crypto for the financing of terrorism.

On the morning of October 7th, Hamas militants fired an estimated 2,200 rockets towards Israel, as hundreds of militants entered Israel on motorcycles and motorboats. As of October 11, 2023, over 1,200 people have died in Israel as a result of the attacks, and 2,900 have been wounded. While “[i]t couldn’t be determined whether the crypto they received was directly used to finance the assault,” Hamas has been clear in its solicitations for crypto about the intended use of the assets. As the group said in a Telegram post asking for bitcoin, “[t]he reality of jihad is the expenditure of effort and energy, and money is the backbone of war.”

Both the Israeli and U.S. governments have warned of the threat that crypto poses in the fight against terrorism. The Israeli government has seized crypto assets from terrorist organizations including Hamas and Hezbollah – before. As recently as August 2023, the country’s National Bureau for Counter-Terror Financing ordered the seizure of 67 PIJ-owned accounts with Binance, the world’s largest crypto exchange. Despite these and other seizures, experts believe that only “a small percentage of the overall amount of funds that flowed through” Hamas and PIJ wallets has been seized.

That the deadly attack by Hamas on Israeli civilians comes as the group has become “one of the most sophisticated crypto users in the terror-finance domain” clarifies the national security threat crypto poses to the U.S., and our allies. Congress and this Administration must take strong action to thoroughly address crypto illicit finance risks before it can be used to finance another tragedy. As Congress considers legislative proposals designed to mitigate crypto money laundering and illicit finance risks, we urge you to swiftly and categorically act to meaningfully curtail illicit crypto activity and protect our national security and that of our allies. We therefore request answers to the following questions regarding Treasury’s plans to address the serious national security threats posed by the use of cryptocurrency to finance terrorism no later than October 31, 2023:

1. What steps is the Biden Administration taking to address the use of cryptocurrency by terrorist organizations, including but not limited to Hamas, PIJ, and Hezbollah?
2. Reports indicate that Hamas and PIJ collectively raised over $130 million in crypto between August 2021 and June 2023.12 Is this consistent with the Administration’s estimates? Does the Administration have an estimate of the value of crypto assets remaining in wallets controlled by these groups?
3. Does the Administration have an estimate of what percentage of Hamas, PIJ, and Hezbollah’s total funding moves through cryptocurrency channels? Does the Administration know how those funds are utilized and through what means?
4. What challenges does the Administration face in arresting the success of groups like Hamas in raising funds via cryptocurrency? How is it addressing those challenges?
5. Reports suggest that PIJ held crypto accounts at Binance, and that PIJ “primarily used the stablecoin tether” to transact.
1. What information does the Administration have about which actors are facilitating the sending and exchange of digital assets to and between terrorist organizations like Hamas, PIJ, and Hezbollah?
2. Which actors are facilitating the exchange of cryptocurrency for other assets, including those exchanged for weapons?
3. Where are these actors based?
4. What actions has the Administration taken against these actors?
6. What additional statutory tools does the Administration need to address the national security threats posed by illicit use of crypto by terrorist organizations?
7. What additional resources does the Administration need to address the national security threats posed by illicit use of crypto by terrorist organizations?

Sincerely,

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