Hamas Donors Avoid Binance in Favor of Bybit
According to CoinDesk, a forfeiture document submitted by the U.S. Department of Justice on September 9 included a letter from Hamas's military wing, the Al-Qassam Brigades, to potential donors. The letter explicitly advised against using Binance to transfer funds, recommending platforms such as Bybit, OKX, Kast, and Redotpay instead. It suggested using Tether's USDT stablecoin and transferring via the TRC-20 network on the Tron blockchain.
The letter stated, "It is best not to use the 'Binance' platform to transfer support funds; do not enter any data that can display our official name..." It specifically noted that Binance "can only be used to purchase currency, and then another application must be used to complete the actual transfer," implying that donors should view Binance merely as a fiat-to-crypto exchange and then use other, less traceable platforms for the final fund transfer.
This letter is part of a series of law enforcement actions by the U.S. Department of Justice and the FBI targeting Hamas's crypto financing network. Previously, the FBI announced on September 1-2 that it had seized approximately $560,000 in related crypto assets. The three court orders underpinning these actions were issued on March 25, June 25, and October 10, 2025, based on Title 18, Section 981(a)(1)(G) and Section 2339B of the U.S. Code. The FBI also took over the main website of the Al-Qassam Brigades, AlQassam.ps, and the Telegram channel used for fundraising, obtaining contact information for thousands of potential donors who could face up to 20 years in prison for "terrorism financing" felony charges. Blockchain analysis shows that since the end of 2024, the Al-Qassam Brigades have turned over more than $1.5 million in digital assets, primarily relying on USDT and frequently changing wallet addresses to evade tracking.
The Al-Qassam Brigades began testing cryptocurrency fundraising around 2019 and publicly claimed in April 2023 that it would stop accepting Bitcoin donations. However, the Department of Justice accused it of continuing to secretly raise funds through cryptocurrency, shifting to rapid wallet rotation and encrypted communication channels (such as Telegram) to continue operations. Additionally, as early as October 2023, the Israel Defense Forces had sanctioned a number of Binance accounts and Tron wallets allegedly linked to the Palestinian Islamic Jihad organization, involving approximately $93.7 million in USDT inflows, although subsequent analysis indicated that a significant portion of the funds might have originated from victims of a crypto scam known as Audax Trading, rather than direct terrorism financing.
Binance's Chief Compliance Officer Noah Perlman responded, stating, "When terrorist organizations tell people to avoid Binance, it indicates that our control measures are working; Binance is not a safe haven for illegal actors." OKX stated that the wallet addresses mentioned in the letter are not associated with OKX, and its internal risk control system has flagged those addresses as involved in illegal activities, intercepting any customer transfers to those addresses. Kast stated that the company has a dedicated financial crime compliance function with a compliance team of over 50 people, using third-party tools such as Elliptic, Sumsub, and Sardine for sanctions and transaction monitoring. Bybit declined to comment, and Redotpay did not respond to requests for comment.
From an industry perspective, this letter objectively reflects the distribution differences of crypto compliance regulatory pressure among different exchanges. Binance, which paid a record $4.3 billion settlement to the U.S. Department of Justice in November 2023 for anti-money laundering and sanctions violations, has seen its compliance review process widely regarded as having tightened significantly since then. The platform has been marked by terrorist organizations as one to "avoid," which somewhat serves as evidence of its compliance rectification efforts. In contrast, platforms like Bybit and Redotpay, which have not responded directly or have disclosed less compliance information, may continue to be exploited by illegal funds due to relatively lax scrutiny, creating a layered flow of funds where "strongly regulated platforms are excluded, and weakly regulated platforms are favored." The beneficiaries are the leading exchanges that have strengthened their compliance capabilities and thus shed the stigma of being "terror financing channels." The pressured parties are the platforms recommended by terrorist organizations, facing credibility challenges, as well as the TRC-20/USDT network itself, which may increase tracing difficulties due to rapid cross-chain rotations.
Source: Public Information
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The entanglement of Binance with the issue of terrorism financing has historical precedents. Internal communications previously disclosed by the U.S. Commodity Futures Trading Commission (CFTC) showed that Binance compliance personnel privately discussed that terrorists "usually only transfer small amounts of money," with a colleague even responding that "$600 can't even buy an AK47," reflecting the platform's early lax compliance culture. In October 2023, the Israel Defense Forces sanctioned a number of Binance accounts allegedly linked to the Palestinian Islamic Jihad organization, involving amounts as high as $93.7 million in USDT (although subsequent analysis showed some funds' sources were questionable). In November of the same year, Binance paid a record $4.3 billion settlement to the U.S. Department of Justice for anti-money laundering and sanctions violations, with founder Changpeng Zhao pleading guilty and resigning as CEO. The Al-Qassam Brigades' letter advising donors to "avoid Binance" is precisely the latest link in this trajectory from "compliance laxity—sanction allegations—huge settlement—compliance rectification."
From the perspective of fund routing logic, the Al-Qassam Brigades' letter is essentially an "illegal fund channel selection guide"—advising to use Binance only as a fiat deposit channel and then quickly transfer to other platforms with relatively lax scrutiny to complete the final transfer, reflecting a strategy of separating "deposit convenience" and "scrutiny strictness" for illegal funds. The choice of the USDT and TRC-20 network combination is not coincidental—Tron network transfers are fast and low-cost, and USDT, as the most liquid stablecoin globally, has historically been one of the preferred vehicles for terrorism financing, scam funds, and sanction evasion, which aligns with Tether's previous cooperation with law enforcement to freeze addresses, yet still struggles to completely eliminate its network's use for illegal transfers.
This is highly similar to the historical "anti-money laundering compliance arms race" experienced by traditional banking systems. After HSBC was fined $1.9 billion in 2012 for laundering money for Mexican drug lords, it was forced to tighten compliance reviews significantly, leading criminal funds to shift to smaller banks or alternative remittance channels with relatively lax scrutiny, creating a "strong regulatory agencies being evaded, weak regulatory agencies being utilized" effect for fund transfers. Today, the crypto industry is undergoing a similar phase of differentiation—leading exchanges, having faced heavy penalties, are compelled to establish relatively mature compliance systems, while illegal funds continue to migrate to smaller platforms with insufficient scrutiny and limited public information disclosure. The stark contrast between the proactive responses of OKX and Kast and the silence of Bybit and Redotpay is a microcosm of this internal compliance stratification in the industry.
This essentially represents a structural redistribution of regulatory pressure along the value chain of the crypto industry—heavy penalties and law enforcement actions have not eliminated the demand for illegal funds' use of cryptocurrencies, but rather have squeezed and shifted this demand from well-compliant leading platforms to lesser-compliant secondary platforms, creating a persistent regulatory arbitrage space. As long as the friction costs of cross-platform and cross-chain fund transfers remain lower than the risks of fund freezes due to compliance reviews, illegal funds will continue to seek arbitrage paths between "strongly regulated platforms" and "weakly regulated platforms." The Al-Qassam Brigades' "operational guide" letter objectively provides the entire industry with a public "health check report" on the current distribution differences in compliance enforcement capabilities.
ABAB News · Cognitive Law
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