View of Gaza city. Image by Marcin Monko via License: Creative Commons

After media reported large crypto donations to Palestinian terrorist organizations, blockchain analyst Elliptic clarified that the numbers are exaggerated. But it’s not the media that loses credibility – it’s Elliptic and other blockchain analysts.

The Wall Street Journal is actually relatively popular in the crypto scene because it reports frequently and often favorably on cryptocurrencies. But for a few days now, the community has been raging and angry in rare unity against the magazine.

The cause is an article published on October 10th. In this, the Wall Street Journal claims that the terrorist organizations Hamas and Palestinian Islamic Jihad (PIJ) have collectively collected more than $130 million in crypto donations. The Wall Street Journal got these numbers from reports by blockchain analysts Elliptic and BitOX.

It is common for journalists to use analysts’ numbers. As a rule, they expressly welcome this. What happened next is all the more strange. Analyst Elliptic published a blog post to “make things clear.” In this he explains that there is no evidence that Hamas received “significant sums” through crypto donations. The Wall Street Journal misinterpreted data from blockchain analysts, including Elliptic itself.

This caused storms of indignation in the crypto scene. Although people never tire of praising the “censorship resistance” and “permission-freedom” of Bitcoin and other cryptocurrencies, they react sensitively when the press reports that the forces of evil also make use of them. An eloquent example of this is Sam Callahan by SwanBitcoin. He says triumphantly that it has been “confirmed” that “the article was demonstrably false,” which is why he accuses the Wall Street Journal of spreading “pure fake news.”

Immediately afterwards, however, Sam Callahan spreads fake news himself. But let’s start at the beginning of the story to unpack the different levels of error and fake news.

The original article

On July 6, analyst Elliptic published an article detailing $94 million in crypto linked to the PIJ. The Wall Street Journal referred to this article.

Shortly after a military operation in the West Bank in June, Elliptic explains, Israel’s Defense Minister Yoav Gallant signed an order seizing 26 Tron wallets and 67 accounts on exchanges. These wallets contained almost $94 million in USDT, USDC and TRX.

“Since these were also wallets from crypto exchanges, it is not clear how much of the balance belongs directly to the PIJ,” admits Elliptic. But immediately afterwards, the analyst gives strong reasons why it is very likely that the $94 million in the wallets in question are largely or entirely terrorist donations.

As with other Islamist terrorist organizations, the analyst further explains, “the activity of PIJ-related wallets also correlates with the escalations of the conflict. Both the number of transactions and their volume increased in March 2022 and peaked in May this year – which coincided with an outbreak of violence in which 17 Israelis and two Ukrainians were killed by militants in the West Bank.”

But that’s not all: In May 2023, the transaction volume collapsed by a good 90 percent – which “almost exactly coincided with the fact that Hamas’ al-Quassam Brigades announced that it would suspend its Bitcoin donation campaign.” This clearly indicates that there is no terrorist financing was a secondary aspect of the wallets involved, but rather their main activity.

Furthermore, the figure of $94 for Elliptic is so convincing that the analyst wonders how such a high amount came about. He explains this by saying that the PIJ is considered Iran’s proxy. “Iran’s heavy involvement with cryptoassets to circumvent sanctions may explain the amount.”

Below, Elliptic has shown a chart showing the monthly “transactions to the PIJ”. Elliptic later changed the title of the chart to “Transactions on wallets linked to the PIJ.”

Anyone who points the finger at others…

It’s really hard to imagine how the Wall Street Journal could have understood Elliptic’s post any differently. Sam Callahan nevertheless accuses the journalists of failing in their work: “It has been shown that the authors confused the entire trading volume of an exchange ($82 million) with the address of a terrorist group. Rookie mistake!” Sam says the numbers are 99 percent wrong. The PIJ did not receive 91 million dollars, but just 450,000! This is confirmed by the analyst Chainalysis.

He had also joined the debate shortly before. “Looking at the recipients of a wallet linked to terrorist financing,” explains Chainalysis, “we find around 20 service providers who have received between $8.4 and $1.1 billion in cryptocurrencies.” A closer look However, one of these providers shows “that of approximately $82 million in cryptocurrencies received by this address, only around $450,000 was sent from a wallet that is verifiably terrorist financing.”

So that’s the number that Sam Callahan so triumphantly mentions. It’s obvious that he misunderstood Chainalysis that it’s hard not to assume intent. At no point does the analyst mention that of the alleged $91 million, only 450,000 are terrorist donations. It simply explains that among the counterparties with which ONE terror-financing wallet interacts, only a small portion of ONE medium-sized wallet was PROVibly paid for by a terror financier.

Chainalysis does not want to give concrete figures on how much Palestinian terrorist organizations have received. “Considering how terrorist organizations use service providers in both traditional finance and on blockchain, it is difficult to accurately estimate how much money is flowing to terrorist organizations.”

Sam’s lack of understanding of Chainalysis’s article is glaring. Nevertheless, the crypto community cheers his tweet and incites against the Wall Street Journal. Neither Chainalysis nor any other crypto media outlet bothers to alert the outside world to this demonstration of poor literacy.

“Our analyzes are worthless!”

Let’s summarize here: Elliptic published an article in June that explains quite clearly why the $94 million in cryptocurrencies that the Israeli Ministry of Defense wanted to confiscate are largely or entirely connected to the PIJ. The chronology of the payment flows strongly suggests that terrorist financing was the main activity of the addresses in question, and the wording in the article suggests that this is precisely what Elliptic assumes.

The Wall Street Journal accurately reproduced the Elliptic article. But the journalists’ mistake was to take the analyst at his word and view him as a full-fledged source. Little did they know that a few months later, Elliptic would more or less dismiss their own post as “fake news.”

The crypto scene is now raging against the Wall Street Journal and accusing it of spreading fake news. The magazine responded by publishing a Correction attached to the article. However, this clarification only concerns a small detail. It does not reduce the claimed sum from 93 to 12 million, as some crypto media reports.

It is not the journalists from Wall Street Magazine who have embarrassed themselves in this case, even if the crypto scene would like it that way. It’s also not the crypto influencers like Sam Callahan (and also Nic Carter, Ryan Adams and others) who actually post demonstrable misunderstandings on Twitter, nor even the crypto media who aren’t even capable of providing a correction to understand correctly. The crypto community has also not embarrassed itself the most by uncritically agreeing with “their” influencers and media.

One group in particular was embarrassed in this affair: the blockchain analysts, especially Elliptic, but also Chainalysis. They take an oath of disclosure and unanimously declare: Don’t trust us! Our analytics aren’t worth the pixels we use to publish them. And that is exactly what should remain, both in the crypto community and among journalists. Blockchain analytics are not trustworthy.


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