Making a connection between the New York trial of disgraced FTX tycoon Sam Bankman-Fried and Hamas terrorists may seem the stuff of conspiracy theories.
But there is a common thread, in the shape of crypto-currencies.
Bankman-Fried used the public markets to turn crypto deals and investment into a trading platform, which at its peak valued his personal fortune at an astonishing $40billion. Hamas and other terrorist organisations regard crypto as a gift from the gods, which allows them to collect and move funds around the globe with minimum intrusion.
The crypto craze has never been anything more than a giant Ponzi scheme.
The blockchain technology involved may have value and central bank digital currencies may eventually become critical to the global financial system.
However, when I think crypto, Morgan Stanley boss James Gorman’s words come to mind. ‘Current value of bitcoin, $60,000. Real value, zero.’ What one hadn’t realised at the time is that the biggest player in the market, Bankman-Fried, would have a dramatic fall from grace, as elegantly described by Michael Lewis in his intriguing homage Going Infinite.
Regulators, including the UK’s Financial Conduct Authority, have warned of crypto risks and its use by money launderers. But there has been little public recognition that it is the favoured means of exchange for terrorists.
Hamas’s barbaric surprise attack on Israel a week ago may largely have been financed by Iran. US investigators also have uncovered a far flung network of online donors to Hamas, Islamic Jihad and other proscribed enterprises.
Before the current conflict, the US Justice Department already was pursuing a series of money laundering cases involving Hamas. Little is known because files are sealed for national security reasons.
Among Israel’s first actions, as it retaliated against Hamas, was to seize crypto-currency addresses linked to it and another militant Palestinian group. Some tens of millions of dollars in crypto allegedly have passed through these accounts.
Crypto offers an organisation designated as terrorist by the US, Britain and the EU (but not the BBC!) to evade sanctions.
Stopping the activity, according to a former CIA analyst quoted by CNN, ‘is a constant game of cat and mouse’. Both Facebook and X have been used to post wallet addresses which allow Hamas sympathisers to donate in crypto.
In Israel this spring, I found myself debating crypto with an American philanthropist. He related how along the bitcoin journey he had made substantial sums of money. If he had known that in trading bitcoin he was indirectly supporting violent enemies of Israel, he might have been less positive.
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