Estimated Reading Time: 6 minutes

Key Takeaways

• OFAC sanctioned BuyCash, a Gaza-based crypto exchange operational since 2014, and its operator in October as part of targeting ten Hamas financiers.
• January sanctions hit Herzallah Exchange for laundering Hamas and PIJ funds via cryptocurrency, in coordination with UK and Australia.
• Hamas’s global investment portfolio is estimated at hundreds of millions of dollars, with assets in Sudan, Turkey, UAE, and elsewhere.
• Treasury has targeted nearly 1,000 Iran-linked terrorist entities; crypto wallets linked to Hamas fundraising received millions in donations.
• Sanctions block all US-related property and transactions for designated persons and 50%+ owned entities.

Table of Contents

• Background
• Current Status
• Analysis
• Implications
• Timeline of Sanctions
• Key Quotes
• Open Questions
• Frequently Asked Questions

Background

Hamas, designated as a Foreign Terrorist Organization by the US State Department since 1997, relies on diverse funding including Iranian support, a secret international investment portfolio worth hundreds of millions, and cryptocurrency fundraising. The portfolio involves companies in Sudan (e.g., Al Rowad Real Estate), Algeria, Turkey, UAE, and Qatar. Following the October 7, Hamas attack on Israel, Treasury intensified efforts, building on prior actions like May sanctions on portfolio managers. Crypto has been used since at least 2020 to bypass borders and fund West Bank operations.

Current Status

As of the latest actions, OFAC has conducted multiple sanctions rounds post-October: October 18 (10 individuals/entities including BuyCash), November/December (leaders/financiers), January 22 (Herzallah Exchange and crypto facilitators with UK/Australia), and further UK-coordinated actions. BuyCash, operational since 2014, processed Hamas funds and transfers for other groups; its Bitcoin wallet received over $2,000 from affiliates in 2019. Herzallah Exchange, owned by the Hirzallah family, laundered funds for Hamas and PIJ via crypto. No new sanctions specific to this query post-January are in results.

Analysis

Sanctions under E.O. 13224 block assets and transactions, extending to 50% owned entities, effectively isolating networks. Crypto’s pseudonymity aids evasion but on-chain analysis enables tracking, as with seized wallets in 2021 linked to Hamas’s Izz al-Din Qassam Brigades. Coordination with allies amplifies impact; no major conflicts in data, though exact crypto volumes vary (e.g., Gaza Now wallets received $4.5M total). Treasury’s efforts degraded but not eliminated Hamas financing, per ongoing actions.

Implications

These measures deny Hamas operational funds, freezing assets globally where enforceable, and deter facilitators. Crypto sanctions signal heightened scrutiny on virtual assets for terror finance, impacting exchanges and users. Broader effects include pressure on Iran-linked proxies; however, Hamas adapts via new channels, necessitating continuous international enforcement.

Timeline of Sanctions

• June 2021: Israel’s National Bureau for Counter Terrorist Financing seizes Hamas-linked crypto wallets, including one tied to Izz al-Din Qassam Brigades.
• May 24, 2022: OFAC designates Hamas investment portfolio officials/companies, including Sudan’s Al Rowad Real Estate.
• October 7, 2023: Hamas terrorist attack on Israel prompts intensified US sanctions.
• October 18, 2023: OFAC sanctions 10 Hamas members/facilitators, including Gaza-based BuyCash crypto exchange and operator.
• November 14, 2023: US/UK sanctions on Hamas leaders and financiers.
• December 13, 2023: US/UK sanctions on additional Hamas financial officials.
• January 22, 2024: OFAC, UK, Australia sanction Herzallah Exchange and crypto facilitators for Hamas/PIJ funding.

Key Quotes

“The United States is taking swift and decisive action to target Hamas’s financiers and facilitators following its brutal and unconscionable massacre of Israeli civilians.”

“Hamas has sought to leverage a variety of financial transfer mechanisms, including the exploitation of cryptocurrency, to channel funds to support the group’s terrorist activities.”

“Treasury remains committed to degrading Hamas’ ability to finance its terrorist activities, including through online fundraising campaigns that seek to funnel money directly to the group.”

Open Questions

• Exact current status of sanctioned entities like BuyCash and Herzallah (e.g., operational status post-sanctions).
• Total cryptocurrency funds transferred to Hamas via these networks (estimates exist but no comprehensive figure).
• Outcomes of asset freezes/seizures and enforcement in jurisdictions like Gaza, Sudan, Turkey.
• Any sanctions updates between January and specific to Hamas crypto networks.
• Effectiveness metrics: extent to which these actions reduced Hamas funding.

Frequently Asked Questions

What is OFAC’s role in sanctioning Hamas?

The US Treasury’s Office of Foreign Assets Control (OFAC) imposes sanctions to disrupt financial networks supporting terrorist groups like Hamas. These actions block their US assets and prohibit transactions, aiming to cut off funding for their activities.

Which cryptocurrency exchanges were sanctioned?

OFAC specifically sanctioned BuyCash, a Gaza-based virtual currency exchange, in October. In January, Herzallah Exchange was also sanctioned, in coordination with the UK and Australia, for laundering funds for Hamas and Palestinian Islamic Jihad (PIJ) via cryptocurrency.

How does Hamas fund its operations?

Hamas relies on several funding sources including significant support from Iran, a secretive international investment portfolio estimated to be worth hundreds of millions of dollars, and the exploitation of cryptocurrency transfers to move funds across borders.

What is the impact of these sanctions?

These sanctions aim to deny Hamas operational funds by freezing assets globally where enforceable and deterring financial facilitators. They also signal increased scrutiny on virtual assets for terror finance, putting pressure on exchanges and users to comply with regulations.