Chainalysis says recent media reports about the supposed use of crypto by terrorist organizations might be overstating metrics and using “flawed analyses”

- Chainalysis said some recent reports about the supposed use of crypto by terrorist organizations might be overstating metrics and using “flawed analyses.”

The Block 2023-10-19 RT Watson

Context & Ripple Effects

Chainalysis has built its role around tracing transactions for governments and law enforcement, as reflected in its work with public-sector investigators. Its earlier estimates of crypto-related criminal transfers also show why its methodological disputes can shape the broader debate over illicit use.

This response matters because claims about terrorist financing carry unusually high stakes for crypto’s legitimacy and for the credibility of blockchain-analysis vendors that supply those assessments.

First-order effects

The reports challenged by Chainalysis face immediate scrutiny over how they attribute wallets and aggregate transaction flows, rather than treating headline totals as settled measures of terrorist use.
Chainalysis publicly differentiates its own analytic approach from the disputed coverage, reinforcing methodology as a core part of its value to investigative and compliance customers.

Second-order effects

Newsrooms, policymakers, and compliance teams using blockchain-risk claims will have stronger reason to demand transparent attribution methods and caveats before acting on reported totals.
Competing analytics providers may need to make their classifications and assumptions more legible, since disagreement over measurement can affect which risk assessments customers trust.

Third-order effects

If these disputes persist, crypto-risk reporting may move toward more formal standards for wallet attribution, transaction counting, and uncertainty disclosure.
The episode underscores the crypto legitimacy gap: the sector’s policy treatment can turn on contested measurements of illicit activity, not only on the underlying transactions.

The trend: Crypto’s integration with enforcement and regulation is making the methodology behind illicit-finance metrics as consequential as the metrics themselves.

Discussion

@iampaulgrewal @iampaulgrewal on x
It's disappointing that some would capitalize on a tragedy to scapegoat crypto while ignoring significant terror finance elsewhere. But no currency—whether fiat, gold, or crypto—should ever be used to support terrorism. Here's how we fight it at @coinbase. https://www.coinbase.co…
@stevennerayoff Steven Nerayoff on x
Could @SenWarren be right crypto is used to fund terrorism? @SBF_FTX donated $39 million just to her party's midterm election. She may have a point but referring to her party in such derogatory terms is going too far. Some may be unpatriotic but come on terrorists? @JohnEDeaton1
@repmikelevin Rep. Mike Levin on x
In the months leading up to Hamas' brutal attack against Israel, Hamas raised millions of dollars via crypto, evading U.S. sanctions. I joined over 100 of my colleagues in urging @POTUS to address and prevent crypto-financed terrorism. https://www.reuters.com/...
@timobrien Tim O'Brien on x
Eighty-six members of Congress representing both Democrats and Republicans pressed the Biden administration for details on how it plans to prevent militant organizations from using crypto in the “financing of terrorism.” Read here: https://www.bloomberg.com/...
@billhughesdc @billhughesdc on x
Glad to see @chainalysis correcting the record on crypto and terrorist financing in this blog post. The key points: 1) Terrorism financing is a very small portion of the already very small portion (0.24% of total volume in 2022) of cryptocurrency transaction volume that is...
@pauly0x Pauly on x
Web3 = corporate terrorism 👎 Crypto 2.0 = freedom for all 👍
@zerohedge @zerohedge on x
*BROWN, WARREN QUERY US PLAN TO CURB CRYPTO FINANCING TERRORISM Can't have those $2,000 crypto donations possibly overtaking the billions in cash paradrops [image]
@sensherrodbrown Sherrod Brown on x
Hamas's terrorism is fueled by cryptocurrency. We need to crack down on illicit crypto and stop terrorists from moving money around, evading sanctions, and funding their acts of evil. We must curb this emerging threat & protect our national security. [image]
@jconorgrogan Conor on x
The treasury department has sanctioned a Hamas-linked wallet as Politico reports that “Crypto's role in financing Hamas' activity has emerged as a hot issue for lawmakers” The sanctioned wallet has $16 in it and made its last transfer 18 months ago [image]
@mdudas Mike Dudas on x
warren: “how do we prevent crypto-financed terrorism?” hamas: “please don't send us money via crypto - it's not effective; the israelis can freeze and seize it” [image]
@neerajka Neeraj K Agrawal on x
Chainalysis explains why recent viral estimates of Hamas' crypto use are likely inflated. It looks those estimates assume *all* flows through services providers that process illicit transactions are illicit. That's probably not the case https://www.chainalysis.com/ ...
@lex_node @lex_node on x
imo Warren and the Biden admin are desperately using crypto as a scapegoat to distract from the fact that the Biden admin authorized BILLIONS of dollars in “aid” etc that likely is the real source of funding for Hamas
@valkenburgh Peter Van Valkenburgh on x
Sensational early reporting on the scale of Hamas crypto fundraising significantly misstated the amounts involved. In this important debunking Chainalysis shows how actual terrorist usage may be 1/2-of-1% of the previously reported numbers. [image]
@chainalysis @chainalysis on x
In recent days following the horrific terrorist attack by Hamas in Israel, we have seen overstated metrics and flawed analyses of terrorist groups' use of cryptocurrency, and feel compelled to address some misconceptions. 🧵
@senwarren Elizabeth Warren on x
Hamas raised millions via crypto in the months leading up to their attack on Israel. @RogerMarshallMD, @RepCasten and I are leading 100+ lawmakers urging the Biden admin to address crypto-financed terrorism. https://www.reuters.com/...
@cmdoerfler Chris Doerfler on x
one of the patently false statements by Chainalysis. “The unique transparency inherent in blockchain technology makes cryptocurrency particularly traceable and thus less suitable for illicit activities, including financing terrorism.” https://www.chainalysis.com/ ...
@jeffjohnroberts Jeff Roberts on x
This @chainalysis “Correcting the record” post feels like a direct response to that overblown WSJ report that crypto was a prime cause of the Hamas attack https://www.chainalysis.com/ ...
@ddayen David Dayen on x
You may remember the Blockchain 8, who tried to stop SEC investigations into crypto. They've been quiet after reports that Hamas used crypto to fund itself. In fact, 2 of the Blockchain 8 signed onto @SenWarren's effort to stop crypto money laundering: https://prospect.org/... [i…
@chainalysis @chainalysis on x
One such service is Buy Cash, a Gaza-based business that provides money transfer and virtual currency exchange services that was sanctioned by @USTreasury and OFAC today (we'll have more on Buy Cash later). https://home.treasury.gov/...
@cengizyar Cengiz on threads
“this entire space is 90% grifters” https://www.404media.co/...
@dangillmor@mastodon.social Dan Gillmor on mastodon
Open source intelligence (OSINT) has been one our most valuable sources of information, but the deadbird site is encouraging lying propagandists and disinformation specialists to poison the entire ecosystem. Whether Musk's goal is money or amplifying deceit, this is deliberate —…
@jasonkoebler@mastodon.social Jason Koebler on mastodon
poorly vetted/opportunistic “OSINT” is spreading super widely by verified accounts on Twitter, incentivized by Musk's changes: “Frankly right now, the crowd drives what is ‘true’” — One expert told us: “today's problem is unprecedented” — https://www.404media.co/...
@jburnmurdoch John Burn-Murdoch on x
Some quick thoughts on why large parts of the mainstream media keep slipping up on Gaza/Israel (and why it was the same at times with Covid): The main reason is a failure to keep pace with modern news gathering techniques, but there's more.
@osinttechnical @osinttechnical on x
Honestly a bunch of people are going to have to come to terms with the fact that they fell victim to incredibly weak propaganda that was unintentionally refuted by the source in a convincing manner less than 12 hours later Oh who am I kidding there's absolutely no way they will
@osinttechnical @osinttechnical on x
Update on the chapel at the Ahli Hospital in Gaza, the building lost several of its stained glass windows in the explosion, but otherwise appears to be intact. [video]
@josephfcox Joseph Cox on x
New: verified Twitter ‘OSINT’ accounts are destroying the Israel-Palestine information ecosystem. What used to be a network of reliable experts has been taken over by profit and click driven verified accounts. Everyone loses out. “Unprecedented” levels https://www.404media.co/...…
@colbybadhwar Colby Badhwar on x
The worst offender is OSINTdefender, whom many gullible politicians, staffers and journalists blindly follow and RT.

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