Terror Groups Exploit Crowdfunding Gaps for Gaza Aid

US federal indictments reveal that Hamas and Islamic Jihad have allegedly been funneling donations, ostensibly for humanitarian aid, through crowdfunding platforms, crypto exchanges, and digital wallets. An investigation by Shomrim and N12 magazine traced these funds, highlighting a significant lack of oversight that enables their transfer to terrorist organizations.

One case involves Catherine Washburn, a New York resident, who allegedly raised over $30,000 in cryptocurrency for an Islamic Jihad operative identified as H.H., even after he revealed his affiliation. Washburn was indicted on federal charges for transferring funds to a designated terrorist organization. The primary platform used for these fundraising efforts was the Australian crowdfunding site Chuffed.

Legal loopholes in Australia and other countries exempt crowdfunding platforms from adhering to anti-money laundering regulations, which terrorist groups are reportedly exploiting to raise substantial funds. Hans-Jacob Schindler, a senior official at the Counter Extremism Project (CEP), explained that these regulatory gaps allow terrorist organizations to obscure the final destination of funds. "In the strict sense, this is not money laundering, but it is certainly obfuscation," he stated, noting that platforms often only see a fraction of the overall picture.

Crowdfunding platforms defend their model by asserting they are not financial institutions but merely online venues connecting donors and campaign organizers, with actual fund transfers handled by third-party payment processors. This decentralized structure, involving the hosting site, payment processor, and banking institution, results in each entity possessing only fragmented information about the money flow, making it difficult to track the funds' ultimate destination.

Washburn's case is one of at least three federal cases in the US alleging that funds raised through crowdfunding for Gaza have been diverted to Hamas or Islamic Jihad. Analysis of legal documents and blockchain records shows how easily funds can be raised and transferred with minimal official scrutiny. This follows previous revelations that crypto wallets officially designated by Israel as belonging to Hamas and Iran's Revolutionary Guard continued to conduct transactions through major crypto exchanges like Binance, which later admitted to failures in its anti-money laundering controls.

Further examples include Salim Al-Zaak, accused of raising approximately $1.75 million, with about $600,000 in the US, under the guise of aid for Gaza, and channeling it to Hamas. When sanctions tightened on platforms like PayPal, Al-Zaak allegedly directed his associate to use cryptocurrency exchanges with lighter regulations. Another case involves Rada Sebasi, who allegedly transferred $116,000 of $600,000 raised through his charity, "Ikram," to a Hamas operative in Turkey under the pretext of humanitarian aid.

GoFundMe reported over $300 million raised for humanitarian and public causes in Gaza since October 7th. The Shomrim investigation also noted that some campaigns on Chuffed for "Palestine" feature symbols associated with Hamas and its military wing, with some explicitly stating donations will be converted to crypto and sent to Gaza without regulatory oversight. Chuffed, Stripe, Coinbase, and Bybit did not respond to requests for comment.