According to a report by prominent US researchers, individuals linked to Hamas may have gained substantial financial benefits from the terrorist attacks on October 7.
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The report, titled “Trading on Terror?,” was authored by law professors Robert Jackson Jr of New York University and Joshua Mitts of Columbia University. It highlights suspicious stock trading activities involving Israeli companies in the weeks leading up to the attacks, which have prompted an investigation by Israeli authorities.
A notable instance in the 67-page paper describes an anonymous trader shorting 4.43 million shares of Leumi, Israel’s largest bank, between September 15 and October 5. This resulted in a profit of nearly $900 million following the economic downturn in Israel due to the war in Gaza. Jackson and Mitts, experts in securities regulation and short-selling, respectively, inferred that these short sellers were likely connected to Hamas.
The researchers observed a significant and unusual increase in trading risky short-dated options on Israeli companies just before the attacks. They cited transactions on the Enterprise Investment Scheme (EIS), a security on the New York Stock Exchange that offers exposure to Israeli exchange-traded funds through the MSCI Israel ETF. EIS tracks major indices on the Tel Aviv Stock Exchange, reflecting the broader Israeli economy.
On October 2, five days before the attack, an investor executed approximately 227,000 short transactions against the EIS. The volume of these transactions was so substantial that Jackson and Mitts deemed it highly improbable to have occurred by chance. Following the attack, the value of EIS dropped by 7.1% on October 11, the first trading day in the US after the massacre, leading to significant profits for those who shorted Israeli shares.
The paper also references a surge in short selling of Israeli securities on the Tel Aviv Stock Exchange, surpassing levels seen during other crises, including the 2008 financial crisis, the 2014 Israel-Gaza war, and the Covid-19 pandemic. Israeli sources suggest that Hamas, known for its financial acumen, could be behind these shorts. If these trades were indeed linked to Hamas, US authorities could freeze the profits, as American laws prohibit financing terrorism.
The professors also noted similar trading patterns in early April, around the time Hamas was reportedly planning its attack on Israel. While the identity of the individuals or entities behind these transactions remains unconfirmed, the evidence suggests a possible Hamas affiliation.
The report also touches on the use of cryptocurrency by pro-Palestinian terrorist groups, including Hamas, for fundraising. Between August 2021 and June 2023, Hamas, Palestinian Islamic Jihad (PIJ), and Hezbollah collectively received over $134 million in cryptocurrency, with Hamas alone receiving about $41 million during this period.
The US Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA) have not commented on any potential investigations. The Israeli Securities Authority acknowledged the issue and confirmed ongoing investigations.
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The findings of Jackson and Mitts raise concerns about the potential use of financial markets and digital currencies to fund terrorist activities, highlighting the need for vigilant monitoring and regulation.
