UN Palestinian aid agency’s cryptocurrency wallets investigated over Hamas ties

EXCLUSIVE — An Israeli firm that helped authorities claw back $90 million worth of Hamas-owned cryptocurrency is investigating digital wallets held by the leading Palestinian aid agency for the United Nations, the Washington Examiner has learned.

Lionsgate Network, a Tel Aviv-based company staffed by blockchain analysts, specializes in cash recovery services for investors and was notably enlisted by Israel’s Ministry of Defense to intercept funds linked to Hamas after the terrorist faction’s deadly Oct. 7 attack on the Jewish state. Now, Lionsgate has embarked on a new project: tracking the flow of crypto donations to the U.N. Relief and Works Agency, whose since-fired employees were recently accused by Israel of participating in the Hamas-led massacre, prompting the United States and other countries to pause aid to UNRWA.

“Our company’s vision is to secure crypto transactions and eliminate financial transactions targeting communities around the world,” Lionsgate Network CEO Bezalel Raviv told the Washington Examiner. “There is a loophole in the financial system, and it’s no longer a very small group of people. It’s like 1.5% of the world’s capital — we’re talking about over $1.5 trillion U.S. dollars.”

The startup’s investigation underscores how UNRWA, which has long earned the ire of foreign policy experts and lawmakers over its ties to Hamas, is being comprehensively scrutinized by watchdogs after the Oct. 7 attack. Rep. Brian Mast (R-FL), who sits on the House Foreign Affairs Committee, introduced legislation on Monday that would ban U.S. funds to UNRWA. The Biden administration renewed aid in 2021 to the Palestinian aid agency just three years after former President Donald Trump cut off support to UNRWA over concerns stemming from its ties to terrorism and the hiring of antisemitic employees.

In turn, Biden’s decision has culminated in taxpayers footing the bill for at least $730 million in payments to UNRWA since 2021. The U.S. government said on Tuesday that over 99% of U.S. funds approved by Congress for the UNRWA have already been sent to it — with just $300,000 still on hold.

UNRWA formed in 1949 “to carry out direct relief and works programs for Palestinian refugees.” But critics say it unjustly relieves Hamas, which controls Gaza, of responsibilities to provide basic services to civilians. The agency, which is led by Swiss Italian Commissioner-General Philippe Lazzarini, faces an uncertain future after Secretary of State Antony Blinken asserted that Israeli allegations about its employees participating in Oct. 7 are “highly credible.”

UNRWA has a 501(c)(3) charity in the U.S. that accepts crypto donations, such as bitcoin, a digital asset that, for federal tax purposes, is treated as “property,” according to the IRS and digital software records. The crypto option stems from the UNRWA charity’s partnership in December 2021 with the Giving Block, a fundraising platform for tax-exempt organizations.

Raviv said his company is tracking specific blockchain transactions to see where donations to the Palestinian aid agency end up and is in conversation with the U.S. State Department on certain projects.

While Lionsgate successfully worked to recover cash from Hamas, the terrorist group has become more elusive and shifted its assets around, the CEO told the Washington Examiner. Hamas and other terrorist groups, including Palestinian Islamic Jihad, have increasingly turned to crypto in recent years because its decentralized nature affords secrecy, according to multiple reports.

After Oct. 7, the U.S. government sanctioned the Gaza-based Buy Cash, a company that saw its wallets seized in 2021 by Israel’s National Bureau for Counter Terror Financing “in connection to a Hamas fundraising campaign,” the U.S. Treasury Department said. Crypto coins are stored by users in what are known as digital wallets, which contain information such as private passwords and confidential data, according to Coinbase, the largest crypto exchange in the world.

Lionsgate’s investigation into UNRWA is independent and, for the time being, not on behalf of any clients, according to Raviv.

“Conversations with the State Department are becoming closer because one of the Hamas wallets is still active and over $40 million is moving in and out,” Raviv said.

The Tel Aviv-based analytics and software firm BitOK found Hamas-tied crypto wallets raked in the cash between roughly August 2021 and June 2023, the Wall Street Journal reported.

“Awareness is key,” he said. “We really want to encourage communities and people who are active in the crypto community to look at the problems and solutions.”

Aside from crypto, UNRWA’s charity in the U.S. routinely takes large sums through donor-advised funds, which allow wealthy contributors to shield their names from publicly released financial disclosures. The arrangement is often criticized by watchdogs as a “dark money” loophole.

UNRWA’s charity in the U.S., for instance, accepted $262,578 in 2022 through the Fidelity Investments Charitable Gift Fund, tax forms show.

If you’ve been affected by a crypto scam, you are entitled to a case evaluation.

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