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Hamas shifts tactics in bitcoin fundraising, crypto terror financing

Hamas shifts tactics in bitcoin fundraising, crypto terror financing

LONDON/JERUSALEM – The armed wing of Hamas is using increasingly complex methods of raising funds via bitcoin, researchers say, highlighting the difficulties regulators face in tracking cryptocurrency financing of outfits designated by some as terrorist groups.The Gaza-based Izz el-Deen al-Qassam Brigades, which is proscribed by the United States and the European Union, has been calling on its supporters to donate using the digital currency in a fundraising campaign announced online in late January.
Originally, it asked donors to send bitcoin to a single digital address, or wallet.However, according to research shared with Reuters by leading blockchain analysis firm Elliptic, in recent weeks it has changed the mechanism, with its website generating a new digital wallet with every transaction.This makes it harder for companies around the world to keep tabs on the group’s cryptocurrency financing, the researchers said. A single digital wallet can be red-flagged to cryptocurrency exchanges, in theory allowing them to prevent funds moving through their systems to that destination.But a different wallet for each donation makes this so-called tagging far more complicated, Elliptic said.Between March 26 and April 16, 0.6 bitcoin – worth around $3,300 – was sent to the website-created wallets, Elliptic’s research found. All told, the four-month fundraising campaign has raised around $7,400, the firm said.A spokesman for Hamas, which has ruled the Palestinian territory of Gaza since 2007, declined to comment on Elliptic’s research.Such funds are a fraction of the tens of millions of dollars in annual funding that Israel and the United States says Hamas receives from Iran. Yet the campaign gives insight into how a proscribed group has gone about bitcoin fundraising.”They are still in experimentation stage – trying it out, seeing how much they can raise, and whether it works,” said Elliptic co-founder Tom Robinson.Iran has not publicly detailed its funding of Hamas, though it has not denied its support for the group. Hamas has said Tehran is the biggest backer of the al-Qassam Brigades.London-based Elliptic and U.S. rival Chainalysis are the most prominent blockchain analysis firms, and have gained traction as watchdogs, cryptocurrency companies and firms such as hedge funds seek tools to track digital coins.Backed by investors including Banco Santander’s venture capital arm, Elliptic’s clients include financial firms, regulators and law enforcement agencies in Europe and the United States.Since 2016 it has won contracts with the Federal Bureau of Investigation, Internal Revenue Service and Drug Enforcement Administration, according to USAspending.gov https://www.usaspending.gov/#/search/83bba7bc5a719c1da25ff95d41c4349e, a database of U.S. government contracts.Examples of cryptocurrency funding campaigns by proscribed groups are rare. But the research underscores headaches for companies in the emerging sector in identifying and stamping out exposure to potentially tainted digital coins, even as tools for tracking and tracing cryptocurrencies grow more sophisticated.Dealing with illegal usage is seen as vital if cryptocurrencies are to grow from niche, speculative tokens to assets embraced by the mainstream. Most big financial firms have steered clear of bitcoin and its kin, with money laundering chief among concerns.STEP-BY-STEP INSTRUCTIONSHamas is designated a terrorist organization by the United States and the European Union. Others, including Britain, have proscribed only the al-Qassam Brigades.Such a designation means that, in the United States for instance, it is illegal to provide money or training, with financial firms in control of related funds obliged to report them to the authorities.A two-minute video on the al-Qassam Brigades website lays out step-by-step instructions in Arabic on how supporters can avoid the traditional financial system and donate cryptocurrency.
“How to support the Palestinian resistance via Bitcoin?” it asks.With polished graphics and English subtitles, it explains how to send bitcoin directly, through a money-exchange office, or via a cryptocurrency exchange. “Use a public device so that the wallet is not linked to your IP address,” it says.Elliptic uses a database of information linking digital coin addresses to exchanges, darkweb marketplaces, and proscribed groups to track cryptocurrencies.It pinpointed wallets created by the website by tracking patterns in their unique addresses. The firm monitored these addresses, later identifying multiple transactions that sent funds from the addresses to a major Asia-based cryptocurrency exchange.Thirteen of the donations were made from a separate exchange, also from Asia, said Elliptic, which declined to give further details of the exchanges. It was not clear whether the bitcoin had since been converted to traditional currencies, the firm said.PATCHY REGULATIONHamas’s finances are suffering. Egyptian President Abdel-Fattah Al-Sisi in 2013 closed hundreds of tunnels under the Gaza-Egypt border, preventing the smuggling of weapons and goods from cows to cars, depriving Hamas of tax income.Funding from Iran has also declined following Hamas’s condemnation of the killing of Sunni Muslims in Syria’s civil war, analysts say.Bitcoin could provide respite in that cash squeeze.”It makes it difficult for such funds to be tracked by financial authorities,” said Lotem Finkelshtein, head of threat intelligence at Check Point Technologies, a cybersecurity firm in Tel Aviv.”It’s not so simple to link wallets to organizations.”Israel’s Shin Bet intelligence agency, defense ministry and military declined to comment.Finance Minister Moshe Kahlon, who is also a member of the national security cabinet, told the website Ynet TV this month he was unaware of the fundraising.Regulators and law enforcement agencies have long worried about the potential of digital money – relatively anonymous and easily available online – to finance terrorism.Cryptocurrency regulations vary from country to country. The global watchdog for money laundering, aware of gaps in rules, is due to bring in the first international standards on cryptocurrency oversight by June.But with regulation still patchy, the risk of exposure to tainted coins has kept most big investors away.Even indirect exposure to tainted cryptocurrencies would present problems for financial firms, said Kyle Phillips, a lawyer at Fieldfisher law firm.”There are real issues with establishing the beneficial owners,” he said.

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Bitcoin Beats Other Cryptos in ‘Smarter’ Bull Market, Says Billionaire Investor

Bitcoin Beats Other Cryptos in ‘Smarter’ Bull Market, Says Billionaire Investor

Bitcoin Beats Other Cryptos in ‘Smarter’ Bull Market, Says Billionaire InvestorBitcoin’s dominance will only be more pronounced in this bull market and that’ll show in its value, according to Mike Novogratz. | Source: ShutterstockBy CCN: Mike Novogratz, the billionaire CEO of Galaxy Capital and a former hedge fund manager at Fortress Investment Group, believes alternative cryptocurrencies, or altcoins, will be outperformed by bitcoin in the bull market.Not this time. Market getting smarter. $btc will outperform.— Michael Novogratz (@novogratz) May 19, 2019The statement of Novogratz comes after the bitcoin price risen by more than 115 percent year-to-date against the U.S. dollar, leading the crypto market to add $124 billion to its valuation.Will bitcoin continue to outperform altcoins?Historically, altcoins have relied on the price trend of bitcoin and have rarely demonstrated independent price movements in extended time frames.Altcoins typically surge in value when the bitcoin price shows stability at a tight price range, leaving investors to take high-risk and high-return options over the dominant cryptocurrency.The optimism towards bitcoin, despite the emergence of sophisticated altcoins, is well founded due to the involvement of major financial institutions in the likes of Fidelity and TD Ameritrade building infrastructure on top of bitcoin.Fidelity and ICE, the parent company of the New York Stock Exchange, are initially launching custodial services for bitcoin, targeting institutional investors.According to TD Ameritrade’s executive vice president Steven Quirk, tens of thousands of clients at the brokerage already trade crypto assets in some capacity.But, traders suggest that if the sentiment around the crypto market remains overwhelmingly positive, investors will eventually explore alternative opportunities for high-return trades, which then may fuel a rally for altcoins.One cryptocurrency trader said that bitcoin is likely to climb further throughout 2019, triggering a healthy market for altcoins:The rest of this year will be characterized by rapid BTC advances, healthy corrections and periods of sideways price action, when altcoins will fly. Put that nonsense rhetoric about waiting for capitulation and still not making our bear market lows away. Wrong cycle.Full on degen altcoin season still on track for June. Next few weeks, as BTC finds a range, we’ll continue to see the popular altcoins bounce back 1st. In June, all altcoins across the board will bounce back hard. More disbelief on its way.The concern of some investors like Novogratz on the prospect of a booming market for altcoins is that many retail investors were hurt in the 2017 bull market taking high-risk trades, trading against stable assets like bitcoin.As the market matures and as investors in the market become smarter, Novogratz indicated that the appetite for altcoins could decline.The crypto market has added more than $100 billion to its valuation year-to-date (source: coinmarketcap.com)Similarly, Jeff Sprecher, the chairman of the New York Stock Exchange, said in November 2018:Somehow bitcoin has lived in a swamp and survived. There are thousands of other tokens that you could argue are better but yet bitcoin continues to survive, thrive and attract attention.At the time, Sprecher emphasized that Bakkt, a futures market operator created by NYSE’s parent company ICE, will focus on building a regulated infrastructure for bitcoin first ahead of other assets.Sentiment is generally positiveOn May 17, as CCN reported, the bitcoin price plummeted by 18 percent within hours following an unexpected 5,000 BTC sell order on Bitstamp that led prices of bitcoin and ethereum to crash on BitMEX.The market absorbed the abrupt decline in the bitcoin price fairly well, indicating that the confidence in the near-term price trend of crypto assets remains strong.While investors have cautioned that bitcoin has shown oversold conditions in recent weeks as it surpassed key resistance levels, the momentum of the asset could prevent it facing a large correction some expect would occur in the near-term. About The AuthorJoseph YoungHong Kong-Based Finance and Cryptocurrency Analyst. Contributing regularly to CCN and Hacked. Providing unique insights into the crypto and fintech space since 2012.This article was edited by Samburaj Das.
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Bitcoin’s price has pumped beyond its ‘intrinsic value,’ JPMorgan says

Bitcoin’s price has pumped beyond its ‘intrinsic value,’ JPMorgan says

Banking behemoth JP Morgan Chase & Co. has taken another shot at Bitcoin, BTC claiming the cryptocurrency‘s latest rally has pushed its price beyond its “intrinsic value.”
“Over the past few days, the actual price has moved sharply over marginal cost,” JPMorgan analysts wrote in a note obtained by Bloomberg. “This divergence between actual and intrinsic values carries some echoes of the spike higher in late 2017, and at the time this divergence was resolved mostly by a reduction in actual prices.”

To come to this conclusion, the JP Morgan team treated Bitcoin as a commodity, calculating its “cost of production” based on a number of factors, including estimated computational power, electricity expense, and hardware energy efficiency.
“Defining an intrinsic or fair value for any cryptocurrency is clearly challenging,” the analysts continued. “Indeed, views range from some researchers arguing that it has no fundamental value, to others estimating fair values well in excess of current prices.”

Bitcoin‘s price briefly dropped from almost $8,000 to $7,050 on May 17, after $250 million of long positions got liquidated on BitMEX. Since then, BTC has surged back to $7,893 at the time of writing.
By now, JP Morgan has made a habit out of thrashing Bitcoin and cryptocurrencies. Back in 2017, CEO Jamie Dimon called the currency a “fraud” – a statement he later softened, suggesting he simply doesn’t care about Bitcoin. Since then, JP Morgan launched its own blockchain-based “digital currency,” which was neither a cryptocurrency, nor a stablecoin.

Published May 20, 2019 — 11:54 UTC

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