France: Organizations Suspected of Financing Hamas with Crypto

On October 2, five people were indicted in Paris on suspicions of terrorism financing, money laundering, and breach of trust. This investigation, conducted with the United States, concerns donations that were allegedly diverted to Hamas. Washington also sanctioned two French associations and a leader of the armed group. Meanwhile, French justice estimates the amounts that may have passed through local network channels at about 1.1 million dollars.

Indictments and Coordinated Sanctions

Arrests took place in Saint-Étienne and Saint-André-de-Cubzac at the beginning of October. They are part of an investigation conducted with the American authorities, while the FBI recently intercepted crypto donations intended for Hamas.

In total, five people were indicted in Paris on suspicions of organized terrorism financing, money laundering, and breach of trust. At this stage, they remain presumed innocent and no conviction has been pronounced.

Meanwhile, the United States announced sanctions. The Treasury Department is notably targeting two French associations, Association Baraka and Ensemble C Mieux, as well as a member of Hamas’s military branch identified as the recipient of the funds. According to Washington, the network would have raised more than 2 million dollars since 2020, including 1.5 million after the October 7, 2023 attack.

From PayPal to Bitcoin

Initially, the donation appeals presented the collections as aid intended for civilians in Gaza. However, investigators suspect the organizers then redirected part of the funds to Hamas.

To achieve this, the network would have used public PayPal accounts as well as Western Union transfers made in the name of various recipients. At the end of 2021, the suspects also allegedly started using bitcoin and other digital assets, notably to complicate the identification of senders and beneficiaries.

The funds would then have transited through several exchange platforms. After warnings from a first operator about their origin, the suspects reportedly changed service. Incidentally, Hamas itself had asked its donors to avoid Binance for their crypto transfers.

Estimates differ however between authorities. Washington speaks of several hundred thousand dollars converted into crypto, while French justice assesses the amounts passing through local channels at about 1.1 million dollars.

Crypto at the Heart of Donation Controls

This case primarily shows the difficulty in controlling financial flows without blocking legitimate humanitarian donations. Indeed, the charitable sector uses stablecoins increasingly for its transfers. At the same time, investigators now have on-chain transaction analysis tools to track suspicious funds.

Consequently, calls to strengthen controls are multiplying, while humanitarian actors fear overly strict measures.

The investigation continues in France and the United States. In the crypto world, tracing techniques are also progressing, as shown by the freezes of funds related to Iran operated by Tether. Now it remains to be seen how far investigators will be able to trace back thanks to the traces left by these transactions.