Hezbollah and the use of cryptocurrency to finance terrorism

There has been growing evidence that Hezbollah has used cryptocurrency wallets to finance its terrorist activities. In 2023, Israeli authorities stated that Hezbollah and the IRGC had begun using cryptocurrency to fund their daily operations; in 2024, a police operation in Argentina uncovered a cryptocurrency wallet linked to an operative associated with Hezbollah. Despite the fact that cryptocurrency prices fluctuate widely, it remains an attractive option for terrorist groups because it offers anonymity, decentralization, and global accessibility.

Hezbollah is a Shiite Muslim political party and militant group based in Lebanon that was founded during the Lebanese Civil War (1975–1990). Since the Iranian Revolution (1978–1979), Hezbollah has been actively supported by the Iranian Revolutionary Guard Corps (IRGC). Alongside Hamas in Gaza, the Houthis in Yemen, and some splinter groups within Iraq, Hezbollah is part of the so-called“axis of resistance.” In 1987, it was designated a foreign terrorist organization by the United States, while the European Union designated its military wing a terrorist group in 2013. In recent years, Hezbollah has adapted its financing mechanisms—which include the use of hawala networks and illicit trade—to incorporate cryptocurrency due to its greater anonymity.

What is terrorist financing?

The International Monetary Fund (IMF) defines terrorist financing (TF) as “financial support, in any form, for terrorism or for those who encourage, plan, or engage in it”. The mechanisms through which TF is conducted and the complexity of the operations depend on the terrorist organization in question. The Financial Action Task Force (FATF), which works to combat terrorism and proliferation financing worldwide, has stated that TF exists both to fund specific terrorist acts and to provide material support that can further the organization’s objectives. TF does not necessarily have to focus on illicit activities, as it can also be carried out through funds raised by legitimate businesses or charities.

Hezbollah’s traditional sources of funding

TF also occurs through illicit means; in Hezbollah’s case, mostly through drug trafficking. Hezbollah operatives are suspected of involvement in the trafficking of fenethylline, commonly known as captagon, which produces effects similar to amphetamines. Although originally developed in Germany in the 1960s, Captagon is now popular in the Middle East as a recreational drug. Trafficking this drug is incredibly profitable, as a single pill costs approximately $1 to produce and can be sold for up to $20. Governments, including those of the United States and the United Kingdom, have sanctioned individuals associated with Hezbollah for trafficking Captagon, accusing them of attempting to destabilize the Middle East and fuel an addiction crisis. In 2025, Hezbollah was alleged to have focused on narcotics trafficking and money laundering in Latin American Free Trade Zones (FTZs).

Hezbollah has also been linked to the sale of oil and natural gas, primarily supplying the former Syrian government led by Bashar al-Assad. The U.S. Treasury Department alleges that a senior Hezbollah finance official and several Lebanese businessmen operate networks involved in the smuggling of oil and liquefied natural gas(LNG). It is believed that these smuggling operations generate millions of dollars in revenue for Hezbollah, and according to the U.S. Treasury, these funds are used to finance Hezbollah’s terrorist activities. While the group has its strongest ties in the Middle East, it operates in other parts of the world, including Latin America, where it has been linked to drug trafficking and arms smuggling, and Africa, where profits from the trade in diamonds and other precious stones are channeled to finance the group.

Why is cryptocurrency an attractive option for terrorist groups?

Cryptocurrency is defined as a “medium of exchange created and stored electronically on the blockchain, using cryptographic techniques to verify the transfer of funds and an algorithm to control the creation of monetary units.” This medium of exchange is particularly attractive to terrorist groups because of its anonymity. According to the FATF, Bitcoin specifically poses an increased risk of money laundering because it allows for the anonymous movement of funds internationally; while the initial purchase of cryptocurrency may be traced, all subsequent transactions are difficult to detect.

Cryptocurrency has been gradually adopted by terrorist groups, although it is most commonly associated with the Islamic State and Hezbollah. Despite the fact that cryptocurrency is highly volatile—meaning that the value held in digital wallets can plummet suddenly—it remains an attractive option for terrorist groups because it offers anonymity. Indeed, it is believed that terrorist groups are primarily drawn to cryptocurrency because it provides anonymity, decentralization, and global access.

Hezbollah’s use of cryptocurrency

In recent years, there has been growing evidence that Hezbollah has used cryptocurrency wallets to finance its terrorist activities. In 2023, Israeli average the seizure of cryptocurrency accounts linked to Iran and Hezbollah. According to the defense minister at the time, Hezbollah, the IRGC, and other Syrian groups had begun using cryptocurrency to fund their daily operations. The following year, four people were arrested in Argentina in connection with a cryptocurrency wallet linked to a Syrian man who was associated with Hezbollah.

The increase in counterterrorism successes since 2023 suggests growing regulatory oversight, primarily led by the United States. In 2024, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned a Syrian operator for managing digital wallets used by Hezbollah operatives. The Israeli government has also been active in cracking down on digital wallets, seizing 40 wallets since 2021. Although this is likely a result of Hezbollah’s close ties to Hamas and Iran, it reflects a growing awareness of the role that digital wallets play in the international financial system.

The Road Ahead: Cryptocurrency and Increasing Regulatory Oversight

In conclusion, cryptocurrency will remain of vital importance in the fight against money laundering because it is difficult to trace and allows for the rapid movement of capital derived from both legitimate and illicit sources. However, national governments and international organizations such as the FATF have increasingly recognized the threat posed by cryptocurrency, which operates in a decentralized exchange. As a result, there is growing evidence of regulatory oversight. Since 2021, U.S. and Israeli authorities have detected dozens of Hezbollah-linked crypto wallets and sanctioned individuals allegedly managing them on behalf of the terrorist group. Such operations are likely to continue in the future.