They are all funded in part by a cryptocurrency called Tether. And it is a growing problem.
According to the Wall Street Journal, Tether is now the world’s most heavily traded cryptocurrency by volume. The stablecoin, also known as USDT, maintains a 1:1 exchange ratio with the dollar. Traders use it to stash their cash, easily invest in other cryptocurrencies or swap it into traditional currencies such as the dollar. It is the main way Hamas has been funded by Iran and other terrorist sympathizers around the globe. Blockchain analysis shows that wallets seized by the Israeli government for being connected to Hamas received some $41 million in cryptocurrency between 2020 and 2023, according to Israeli blockchain firm Bitok. More than 99% of that came in tether, Bitok said.
It has been showing up in illicit finance, according to criminal indictments, blockchain analysis and sanctions evasion notices. In the past year, the Journal reports, it has been used to finance Hamas, pay Chinese fentanyl suppliers, fund North Korea’s nuclear program, and to buy sanctioned Venezuelan oil for sanctioned Russian oligarchs. Some of it, Peter Schweizer adds in the most recent episode of The Drill Down, has even been used to buy portions of the US debt.
So, what’s the problem? Tether is chosen by bad actors like the Mexican drug cartels, the North Koreans, and Hamas because it is deliberately hard to trace the source of its transactions and the recipients.