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By Arathy Somasekhar

HOUSTON (Reuters) -Oil prices fell on Monday, with the Brent benchmark dipping below $80 a barrel as investors awaited this week’s OPEC+ meeting and expected curbs on supplies into 2024.

Brent crude futures were down 60 cents, or 0.7%, at $79.98 a barrel. U.S. West Texas Intermediate (WTI) crude futures lost 68 cents, or 0.9%, to $74.86. Both contracts lost $1 in early trading.

Last week, prices tumbled when OPEC+ – the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – postponed to Nov. 30 a ministerial meeting to iron out differences on production targets for African producers.

Since then the group, helmed by de facto leader Saudi Arabia, has moved closer to a compromise, four OPEC+ sources told Reuters on Friday. OPEC+ is looking at deepening oil production cuts despite its policy meeting being postponed to this Thursday, an OPEC+ source said on Monday.

“Although there are headlines that Saudi has made progress reaching consensus, there is limited risk appetite to buy crude ahead of the formal announcement,” said Rebecca Babin, senior energy trader at CIBC Private Wealth US.

“Until we get clarity on how this plays out, expect crude to struggle to rally,” she added.

ING analysts said they expected Saudi Arabia to roll over its additional voluntary cut of 1 million barrels per day (bpd) into next year, and Russia to extend its own cuts.

“Clearly, if we do not see this, it would put further downward pressure on the market,” they said in a note.

Estimated exports by OPEC countries have declined to 1.3 million bpd below levels in April, Goldman Sachs analysts said in a note, in line with the group’s supply targets.

“We still expect an extension of the unilateral Saudi and Russia cuts through at least the first quarter of 2024,” the bank added.

The United Arab Emirates, however, is poised to ramp up exports of Murban crude early next year, according to traders and Reuters data.

Efforts by Iraq to resume northern crude exports via Turkey continue. Iraqi oil officials will meet representatives of international oil companies and Iraqi Kurdish officials in early December to discuss contract changes central to the issue, a deputy minister said.

The International Energy Agency said it expects a slight surplus in global oil markets in 2024 even if OPEC+ nations extend their cuts into next year.

Higher crude stockpiles in the United States have also put downward pressure on prices, analysts said. However, four analysts polled by Reuters estimated on average that crude inventories fell by about 2 million barrels in the week to Nov. 24.

Meanwhile, mediator Qatar on Monday said a truce between Israeli and Hamas forces in Gaza had been extended by two days, continuing a pause in seven weeks of warfare. The Middle East crisis had impacted oil prices as investors worried about impacts on supply.

Money managers cut their net long U.S. crude futures and options positions in the week to Nov. 21, the U.S. Commodity Futures Trading Commission said on Monday.

(Reporting by Arathy Somasekhar in Houston, Paul Carsten in London, Florence Tan and Mohi NarayanEditing by Peter Graff, Mark Potter, Tomasz Janowski, Cynthia Osterman and David Gregorio)

By Sinéad Carew and Harry Robertson

NEW YORK/LONDON (Reuters) -MSCI’s global equity index fell on Monday and U.S. Treasury yields fell while investors digested weak U.S. housing data and waited for key inflation readings later in the week.

Oil prices also fell, with the Brent settling under $80 a barrel, as investors awaited this week’s OPEC+ meeting and expected curbs on supplies into 2024.

The U.S. dollar slid against most major currencies, weighed down by expectations that the Federal Reserve is done cutting interest rates and could start cutting them by the first half of next year.

In precious metals, gold hit a six-month high with a boost from the softer dollar and expectations for a pause in Fed tightening.

Meanwhile, the latest data showed that sales of new U.S. single-family homes fell more than expected in October, likely as higher mortgage rates reduced affordability, but the housing segment remains supported by a shortage of previously owned properties on the market.

“A lot of investors are starting to look out into next year. There’s a growing sense the economy is slowing, that price growth will likely continue to fall, that profit growth will likely fall,” said Jack Ablin, chief investment officer at Cresset Capital, in Chicago.

Ablin saw Monday’s weak home sales data aligning with concerns about a slowing economy.

And he noted deep discounts in stores on Black Friday, which kick-offs holiday shopping, saying “investors are bracing for lower discretionary spending.”

Investors were also looking ahead to Thursday’s release of the Fed’s preferred measure of inflation and euro zone consumer inflation figures, to potentially give markets direction.

On Wall Street, the Dow Jones Industrial Average fell 56.68 points, or 0.16%, to 35,333.47, the S&P 500 lost 8.91 points, or 0.20%, to 4,550.43 and the Nasdaq Composite dropped 9.83 points, or 0.07%, to 14,241.02.

The pan-European STOXX 600 index lost 0.34% and MSCI’s gauge of stocks across the globe shed 0.19% on the day after rising for four weeks in a row.

Stock indexes around the world have gained ground recently as bond yields dropped, with cooling inflation in developed economies boosting investors’ expectations that central banks are finished raising interest rates and might soon cut them.

Still, European Central Bank President Christine Lagarde said the European Central Bank’s fight to contain price growth was not yet done as wage growth was still strong and the outlook was uncertain, but she did point to easing euro zone inflation pressure.

In U.S. Treasuries, benchmark 10-year notes fell steadily during the day and were last down 9.9 basis points to 4.385%, from 4.484% late on Friday.

“It’s the economic data and central bank policy and whatever information comes out within those two areas, those are going to be the areas that are going to move Treasury yields up or down at this point,” said Jim Barnes, director of fixed income at Bryn Mawr Trust in Berwyn, Pennsylvania.

The U.S. dollar slid against most major currencies and was on track for a monthly decline of more than 3%, which would be its biggest monthly drop in a year.

The dollar index, which measures the greenback against a basket for major currencies, fell 0.213%, with the euro up 0.12% to $1.0952.

The Japanese yen strengthened 0.55% versus the greenback at 148.63 per dollar, while sterling was last trading at $1.2625, up 0.14% on the day.

Oil futures lost ground ahead of an OPEC+ meeting on Thursday where member countries will try to agree on supply curbs into 2024. The meeting was originally slated for Sunday but postponed as producers struggled to agree. [O/R]

U.S. crude settled down 0.9% at $74.86 per barrel and Brent fell 0.7% to end at $79.98.

Along with the weaker dollar, investor worries about the Israel-Hamas conflict have boosted gold prices.

Spot gold added 0.6% to $2,013.79 an ounce. U.S. gold futures gained 0.5% to $2,011.80 an ounce.

(Reporting by Sinéad Carew and Chuck Mikolazczak in New York, in New York, Harry Robertson in London, Wayne Cole in Sydney; Editing by Stephen Coates, Ed Osmond, Chizu Nomiyama, Christina Fincher and Marguerita Choy)

Investors Turn to Emerging markets Amid Cheaper Valuations

Heightened volatility and premium valuations in developed nations have made emerging markets attractive investment prospects. The premium valuations that have come to play behind one of the strongest bull runs in US equity are forcing investors to pursue high-risk reward opportunities in emerging markets. Total inflows into exchange traded funds that track developing nations have already risen to highs of $10 billion for the year at the back of the $1.7 trillion equity rally and gains on the bond markets.

Emerging Markets Inflows

Immediate data indicate that net deposits into ETFs that invest in developing nations increased to $766.1 million for the week ended November 24. The increase affirms strong interest in emerging equity markets, which are again on a roll after coming under pressure at the height of the COVID-19 pandemic. However it was a slight drop from the previous weeks inflows

India has emerged as one of the most sought after emerging markets, judging by the capital inflows into ETFs with exposure to the country. Attractive demographics, unique supply and demand dynamics, and a stable democracy have made it attractive for investors eyeing exposure in emerging markets. In addition, investors are becoming increasingly confident.

Emerging markets and bond markets have received significant inflows after coming under immense pressure last year. The softening of inflationary pressures has seen demand for market risk increase significantly. In addition, emerging market valuations are highly attractive compared to valuations in developed nations, especially the US.

With the S&P 500 up by about 18% and tech-heavy Nasdaq up by more than 40% for the year, there are growing concerns that US equities are overstretched on the valuations front. Consequently, investors increasingly turn their attention to emerging markets with attractive valuations as they bounce back from last year’s slowdown and COVID-19-engineered slowdown.

Analysts expect cheaper valuations in emerging markets, a weakening dollar, and a peaking of US Federal rate pricing to bolster sentiment on emerging market assets. Korea and Taiwan are other attractive markets owing to the booming semiconductor and hardware technology business.

China Slowdown

On the other hand, investors are avoiding China as it remains a big risk amid an equity market that is increasingly being driven by earnings. The world’s second-largest economy faces several problems, the key being slow growth and a property market in disarray. The country’s recovery from the pandemic has slowed in recent months, fuelled by turmoil in the property market. Slowing demand for the country’s manufactured goods as global growth also slows continues to pose significant risks.

Amid increased focus on emerging markets, there is also uncertainty about whether the rally is sustainable. EM markets can be highly volatile when hit with headwinds. On the other hand, developed markets like the US have some stability. Equities are looking increasingly attractive, with the US appearing to have peaked on monetary policy tightening. Following a deep pullback in Q3, the S&P 500 and the Nasdaq have rebounded, recouping all losses and affirming renewed interest in US equities.

By Stephen Culp

NEW YORK (Reuters) -U.S. stocks edged lower on Monday, with investors taking a post-Thanksgiving pause as the holiday shopping season kicked in to high gear and retailers lured bargain hunters with Cyber Monday deals.

All three major U.S. stock indexes ended the session modestly in the red.

“Markets are taking a breather to digest these gains we’ve seen in November,” said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management in Minneapolis. “We’re at the higher end of a trading range we’ve been in for some time.”

Online shopping deals as part of Cyber Monday are expected to entice shoppers to spend a record $12 billion, according to Adobe Analytics, in the latest upbeat sign regarding the health of the American consumer, whose spending is responsible for about 70% of the U.S. GDP.

“Coming off four weeks of very strong and positive market activity we’re seeing investors take a bit of a breather and focus on data,” said Greg Bassuk, chief executive officer at AXS Investments in New York. “This week all eyes will be focused on additional inflation data as well as consumer confidence and spending to determine if Main Street has kept up with Wall Street.”

Resilience of the consumer and the tightness of the labor market amid signs of a dampening economy have many market-observers digesting the possibility that while the Federal Reserve has reached the end of its tightening cycle, it might keep restrictive policy rates in place for longer than expected.

Financial markets have priced in a 96.8% likelihood that the central bank will leave its Fed funds target rate unchanged at next month’s meeting, with the possibility of a rate cut starting to gain ground in mid-2024, according to CME’s FedWatch tool.

On the economic front, a larger than expected drop in new home sales added to the subdued tone. Later in the week, market participants look to the Commerce Department’s second take on third-quarter GDP expected on Wednesday, to be followed on Friday with its broad-ranging Personal Consumption Expenditures (PCE) report.

Remarks from Federal Reserve policymakers later in the week will also be parsed for clues regarding the duration of the central bank’s restrictive policy.

“We expect that (the Fed) will continue to be cautious about concluding that they’ve reached the end of rate hikes,” Hainlin added. “We’re close to – if not at – the peak rate, so the debate is how long rates will stay there, and when or if they’ll cut rates in 2024.”

The Dow Jones Industrial Average fell 56.68 points, or 0.16%, to 35,333.47, the S&P 500 lost 8.91 points, or 0.20%, to 4,550.43 and the Nasdaq Composite dropped 9.83 points, or 0.07%, to 14,241.02.

Among the 11 major sectors in the S&P 500, healthcare and industrials suffered the largest percentage drops, while real estate and consumer discretionary gained the most.

Amid the Cyber Monday fervor, Affirm Holdings surged 12.0%, as the payment platform’s “buy now, pay later” option was seen hitting an all-time high, boosting the online holiday sales.

Online gift platforms Etsy and Shopify were up 3.0% and 4.9%, respectively.

Elsewhere, Crown Castle International advanced 3.4% as activist investor Elliott Investment Management sought executive and board changes at the wireless tower owner.

GE HealthCare declined 3.5% following UBS’s downgrade of the medical devices company’s stock to “sell” from “neutral.”

Declining issues outnumbered advancing ones on the NYSE by a 1.25-to-1 ratio; on Nasdaq, a 1.63-to-1 ratio favored decliners.

The S&P 500 posted 38 new 52-week highs and no new lows; the Nasdaq Composite recorded 84 new highs and 79 new lows.

Volume on U.S. exchanges was 9.25 billion shares, compared with the 10.42 billion average for the full session over the last 20 trading days.

(Reporting by Stephen Culp in New YorkAdditional reporting by Shristi Achar A and Amruta Khandekar in BengaluruEditing by Shinjini Ganguli and Matthew Lewis)

By Arathy Somasekhar

HOUSTON (Reuters) -Oil prices fell on Monday, with the Brent benchmark dipping below $80 a barrel as investors awaited this week’s OPEC+ meeting and expected curbs on supplies into 2024.

Brent crude futures were down 60 cents, or 0.7%, at $79.98 a barrel, while U.S. West Texas Intermediate (WTI) crude futures lost 68 cents, or 0.9%, to $74.86. Both contracts lost $1 in early trading.

Prices tumbled midweek when OPEC+ – the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – postponed to Nov. 30 a ministerial meeting to iron out differences on production targets for African producers.

Since then the group, helmed by de facto leader Saudi Arabia, has moved closer to a compromise, four OPEC+ sources told Reuters on Friday, and OPEC+ is looking at deepening oil production cuts despite its policy meeting being postponed to this Thursday, an OPEC+ source said on Monday.

“Although there are headlines that Saudi has made progress reaching consensus, there is limited risk appetite to buy crude ahead of the formal announcement,” said Rebecca Babin, senior energy trader at CIBC Private Wealth US.

“Until we get clarity on how this plays out, expect crude to struggle to rally,” she added.

ING analysts said they expected Saudi Arabia to roll over its additional voluntary cut of 1 million barrels per day (bpd) into next year, and Russia to extend its own cuts.

“Clearly, if we do not see this, it would put further downward pressure on the market,” they said in a note.

Estimated exports by OPEC countries have declined to 1.3 million bpd below levels in April, Goldman Sachs analysts said in a note, in line with the group’s supply targets.

“We still expect an extension of the unilateral Saudi and Russia cuts through at least the first quarter of 2024,” the bank added.

The United Arab Emirates, however, is poised to ramp up exports of Murban crude early next year, according to traders and Reuters data.

Meanwhile, efforts by Iraq to resume northern crude exports via Turkey continue. Iraqi oil officials will meet representatives of international oil companies and Iraqi Kurdish officials in early December to discuss contract changes central to the issue, a deputy minister said.

The International Energy Agency said it expects a slight surplus in global oil markets in 2024 even if OPEC+ nations extend their cuts into next year.

Higher crude stockpiles in the United States have also put downward pressure on prices, analysts said. However, four analysts polled by Reuters estimated on average that crude inventories fell by about 2 million barrels in the week to Nov. 24.

Meanwhile, mediator Qatar on Monday said a truce between Israeli and Hamas forces in Gaza had been extended by two days, continuing a pause in seven weeks of warfare. The Middle East crisis had impacted oil prices as investors worried about impacts on supply.

(Reporting by Arathy Somasekhar in Houston, Paul Carsten in London, Florence Tan and Mohi NarayanEditing by Peter Graff, Mark Potter, Tomasz Janowski and Cynthia Osterman)

By Arriana McLymore and Deborah Mary Sophia

NEW YORK (Reuters) – A record amount of price-pinched holiday shoppers are expected to use buy now, pay later services for Cyber Monday to relieve stress on their wallets, according to Adobe Analytics.

Shoppers are slated to spend between $12 billion and $12.4 billion online on Monday, with $782 million of purchases made with BNPL services, including Klarna and Affirm, representing a surge of nearly 19% from last year, the data company said.

While BNPL has consistently been growing in popularity over the past several years, its usage is getting a further boost from budget-conscious shoppers trying to avoid the additional fees and interest that come with purchases made through credit cards.

Economists anticipated the holiday season would be slower than recent years due to economic pressure on consumers who are dealing with higher interest rates and lingering inflation.

A survey by Klarna found nearly half of those surveyed worried that they would not be able to pay off credit card bills in full from holiday spending.

The buy now, pay later firm saw a 29% increase in orders placed by U.S. shoppers on Black Friday, with some of the most popular items being personal electronics, televisions and kitchen appliances.

“The scale of the adoption (of BNPL) has just gotten so big. It’s become really, really, really popular,” said Dan Dolev, an analyst at Mizuho Securities.

Affirm shares surged 11% on Monday after Adobe Analytics released the upbeat BNPL data.

Average basket sizes for buy now, pay later orders on Black Friday declined 32% compared to last year, according to a report from Quantum Metric, a sign that shoppers aren’t making as big of purchases this year.

(Reporting by Arriana McLymore in New York City and Deborah Sophia in Bengaluru; Additional reporting by Juveria Tabassum; Editing by Aurora Ellis)

(Reuters) – Our Next Energy (ONE) said on Monday it has cut around 25% of its workforce, or 128 employees, as the electric-vehicle battery startup deals with high borrowing costs and an uncertain economy.

The company, founded by former Apple executive Mujeeb Ijaz, said in February it had raised $300 million in a Series B funding, which valued the company at $1.2 billion.

While the Michigan-based company cited “market conditions” as reason for the layoffs, it said it is continuing to focus on establishing its gigafactory in Michigan and to develop a North American supply chain for batteries.

The company unveiled a new anode-free battery pack designed last year to slash cell cost as much as 50% while delivering up to 600 miles (965 km) of driving range.

Tesla supplier Panasonic Holdings said last month that it had cut automotive battery production in Japan in the September quarter, underscoring a global slowdown in EV sales due to high interest rates.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Maju Samuel)

By Stephen Culp

NEW YORK (Reuters) -Wall Street was mixed on Monday as investors took a post-Thanksgiving pause ahead of crucial economic data as the holiday shopping season kicked in to high gear with retailers trying to lure bargain hunters with Cyber Monday deals.

The tech-heavy Nasdaq was slightly higher, the Dow was edging red and the S&P 500 was essentially unchanged, but leaning lower.

Online shopping deals as part of Cyber Monday are expected to entice shoppers to spend a record $12 billion, according to Adobe Analytics, in the latest upbeat sign regarding the health of the American consumer, whose spending is responsible for about 70% of the U.S. GDP.

The S&P 500 Retail index was up 0.9%.

“Coming off four weeks of very strong and positive market activity we’re seeing investors take a bit of a breather and focus on data,” said Greg Bassuk, chief executive officer at AXS Investments in New York. “This week all eyes will be focused on additional inflation data as well as consumer confidence and spending to determine if Main Street has kept up with Wall Street.”

Resilience of the consumer and the tightness of the labor market amid signs of a dampening economy have many market-observers digesting the possibility that while the Federal Reserve has reached the end of its tightening cycle, it might keep restrictive policy rates in place for longer than expected.

Financial markets have cemented a 99.4% likelihood that the central bank will leave its Fed funds target rate unchanged at next month’s meeting, with the possibility of a rate cut starting gaining ground in mid-2024, according to CME’s FedWatch tool.

On the economic front, a larger than expected drop in new home sales added to the subdued sentiment. Later in the week, market participants look to the Commerce Department’s second take on third-quarter GDP expected on Wednesday, to be followed on Friday with its broad-ranging Personal Consumption Expenditures (PCE) report.

Remarks from Federal Reserve policymakers later in the week will also be parsed for clues regarding the duration of the central bank’s restrictive policy.

“Investors are looking for confirmation that not only have rates peaked, but more importantly how quickly the Fed might start lowering rates in 2024,” Bassuk added.

At 2:11 p.m. EST, the Dow Jones Industrial Average fell 46.79 points, or 0.13%, to 35,343.36, the S&P 500 lost 2.83 points, or 0.06%, to 4,556.51 and the Nasdaq Composite added 24.35 points, or 0.17%, to 14,275.21.

Among the 11 major sectors in the S&P 500, real estate and consumer discretionary were enjoying the largest percentage gains, while energy shares were down the most.

Amid the Cyber Monday fervor, Amazon.com gained 1.3% and Walmart edged up 0.6%.

Affirm Holdings surged 11.0%, as the payment platform’s “buy now, pay later” option was seen hitting an all-time high, boosting the online holiday sales.

Online gift platforms Etsy and Shopify were up 3.3% and 5.5%, respectively.

Elsewhere, Crown Castle International advanced 4.8% as activist investor Elliott Investment Management sought executive and board changes at the wireless tower owner.

GE HealthCare sagged by 3.4% following UBS’s downgrade of the medical devices company’s stock to “sell” from “neutral.”

Declining issues outnumbered advancing ones on the NYSE by a 1.18-to-1 ratio; on Nasdaq, a 1.35-to-1 ratio favored decliners.

The S&P 500 posted 34 new 52-week highs and no new lows; the Nasdaq Composite recorded 78 new highs and 64 new lows.

(Reporting by Stephen Culp in New YorkAdditional reporting by Shristi Achar A and Amruta Khandekar in BengaluruEditing by Shinjini Ganguli and Matthew Lewis)

By Svea Herbst-Bayliss and Samrhitha A

(Reuters) -Activist investor Elliott Investment Management on Monday said it was ready to nominate directors at Crown Castle International and push for the ouster of the wireless tower owner’s executives and board members, whom it blames for years of underperformance.

The hedge fund in a letter released on Monday said the company needs “comprehensive leadership change.” It said it was ready to appeal to other shareholders to make changes to the 12-member board, signaling a possible proxy fight next year.

It also wants the company, which is headquartered in Houston and has a market value of $45 billion, to review its fiber strategy, including considering a possible sale of the business, optimizing its incentive plan and improving corporate governance.

It is the second time the U.S. hedge fund is publicly pressuring the company after it urged management to rethink its fiber infrastructure strategy and criticized the company’s returns in 2020.

Elliott, which said it now owns a $2 billion stake in the real estate investment trust, said operational underperformance and flawed capital allocation contributed to a sagging share price. The share price has dropped 22% since the start of the year. On Monday, news that Elliott is pushing for improvements fueled a gain of 4%.

By comparison, Castle Crown’s rivals have performed better. American Tower shares have fallen 6% while SBA Communications have slid 15% since the start of the year.

“We are prepared and intend to make our case directly to shareholders with a majority slate of alternative directors at the company’s 2024 annual meeting,” Elliott managing partner Jesse Cohn and senior portfolio manager Jason Genrich said in the letter.

Crown Castle said it values all shareholders’ views and wants to understand their perspectives.

“We look forward to reviewing Elliott’s materials and are open to commencing a constructive engagement with Elliott,” the company said in a statement, adding that it “remains confident in Crown Castle’s executive leadership as the company continues to act in the best interests of all shareholders.”

Elliott sharply criticized management and the board saying a “lack of oversight … contributed to its irresponsible stewardship and flawed financial policy.”

The hedge fund said the company “disregarded our data-driven analysis” and added that “our recommended changes were neither made nor taken seriously.”

“The company’s strategy, led by CEO Jay Brown since 2016, has been a failure, as demonstrated by the breathtaking magnitude of its underperformance,” the letter said.

Three years ago when Elliott had a roughly $1 billion stake, Crown Castle responded to the hedge fund’s prodding by refreshing its board of directors and announcing that five directors with an average tenure of 20 years would not be seeking re-election.

The window for investors to nominate directors to the board opens early next year.

Elliott has recently called for the ouster of several corporate chiefs. Data from Diligent Market Intelligence show that activists’ demands for the removal of top personnel rose by 46% in 2022 compared with 2021.

(Reporting by Svea Herbst-Bayliss in Providence and Samrhitha Arunasalam in Bengaluru; Editing by Pooja Desai and Mark Porter)

By Tom Wilson and Elizabeth Howcroft

LONDON (Reuters) – A new front has emerged in Israel’s fight against the funding of Iran-backed militant groups from Hamas to Hezbollah: A fast-growing crypto network called Tron.

Quicker and cheaper than its larger rival Bitcoin, Tron has overtaken its rival as a platform for crypto transfers associated with groups designated as terror organizations by Israel, the United States and other countries, according to interviews with seven financial crime experts and blockchain investigations specialists.

A Reuters’ analysis of crypto seizures announced by Israeli security services since 2021 reflects the trend, showing for the first time a sharp rise in the targeting of Tron wallets and a fall in Bitcoin wallet seizures.

“Earlier it was Bitcoin and now our data shows that these terrorist organizations tend to increasingly favor Tron,” said Mriganka Pattnaik, CEO of New York-based blockchain analysis firm Merkle Science, citing Tron’s faster transaction times, low fees, and stability.

Merkle Science says it counts law enforcement agencies in the United States, Britain and Singapore as clients.

Israel’s National Bureau for Counter Terror Financing (NBCTF), which is responsible for such seizures, froze 143 Tron wallets between July 2021 and October 2023 that it believed were connected to a “designated terrorist organization” or used for a “severe terror crime,” the Reuters analysis found.

The Oct. 7 attacks by Hamas on Israel killed around 1,200 people. Israel’s subsequent bombardment and ground invasion of Gaza has killed some 14,000 people. In its response, Israel has also stepped up scrutiny of Hamas’ financing.

Contacted by Reuters with a summary of this article, Hayward Wong, a spokesperson for British Virgin Islands-registered Tron said all technologies could “in theory be used for questionable activities,” citing as an example U.S. dollars being used for money laundering.

Wong said Tron did not have control over those using its technology and that it was not linked to the groups identified by Israel.

Almost two-thirds of Israel’s Tron seizures – 87 – were this year, including 39 wallets that Israel said in June were owned by Lebanon’s Hezbollah, and 26 it said in July belonged to Palestinian Islamic Jihad, a Hamas ally that joined the assault on Israel from Gaza.

The seizures have also included 56 Tron wallets NBCTF said were linked to Hamas, including 46 in March last year it connected to a single Gaza-based money exchange company called Dubai Co. For Exchange.

Weeks after the Hamas assault, Israel announced its biggest known seizure of crypto accounts yet, freezing around 600 accounts it connected to Dubai Co., without stating which crypto networks or coins were used.

More than a dozen people whose funds were frozen in that seizure told Reuters they had been using Tron. They said they traded crypto to help their business or personal finances and denied any connection with Hamas or Islamic Jihad.

One of the people, who identified themselves only as Neo, said it was possible they had transferred money on one occasion to somebody associated with Hamas.

Israel calls Dubai Co. a terrorist group “due to the aid that they provide to the Hamas terrorist organization, particularly its military arm, in transferring funds on a scale of tens of millions of dollars a year.”

A representative for Dubai Co., whose email was listed on the seizure order, did not respond to a request for comment.

The armed wing of Hamas, which had raised crypto funds since at least 2019, said in April it would cease Bitcoin fundraising, citing increased efforts to prevent donations. Hamas did not mention Tron in the statement.

Reuters could not independently determine whether Hamas had used Tron. NBCTF declined to comment for this story, including about its understanding of the shift to Tron and how it linked the wallets to the militant groups. Hamas, Hezbollah and Islamic Jihad did not respond to requests for comment.

Six people listed on Israel’s previous Tron seizure notices who responded to Reuters questions denied connections to militant groups. They included people based in Venezuela, Dubai and the West Bank city of Jenin.

‘AXIS OF RESISTANCE’

In the June statement, Israel said it seized funds “intended for use by the terrorist organizations financed by Iran.” Iran counts Hamas, Hezbollah and Islamic Jihad in a so-called Axis of Resistance opposing Israeli and American power in the Middle East.

In the seizure statements, NBCTF did not affirm Tehran was the source of the funding. Iran’s foreign ministry did not respond to a Reuters request for comment about using Tron to fund groups it supports.

Iran has previously used Tron to skirt U.S. sanctions. Reuters reported last year that Iranian firms used it for $8 billion in transactions between 2018 and 2022.

Estimates of the sums of money that reach proscribed groups through crypto are unreliable because it is hard to say whether money sent to seized wallets was really destined for those groups.

The value of crypto transactions and the digital wallet addresses used for them can be traced on the blockchain – a public ledger that underpins crypto. However, it is hard for those outside law enforcement or crypto trading platforms to know the real identity of those involved in the transactions.

The people Reuters consulted additionally said their research showed the cryptocurrency Tether was dominant across the Tron network.

Tether, the world’s biggest so-called stablecoin, is backed by reserves and aims to keep a 1:1 peg with the dollar. The company said in a statement that it regularly traced and froze tokens “used for nefarious purposes,” and coordinated these efforts with law enforcement.

Tether is the third-largest crypto token, with a market value of $89 billion, up by around a third in the past year, according to CoinGecko data.

Despite its lack of name recognition outside crypto circles, Tron is the dominant blockchain for Tether transactions, currently hosting $48 billion of the tokens, according to Tether’s website. Average daily transactions on Tron hit 9.1 million from April-June, according to data firm Messari, up over 70% from the same period last year.

Justin Sun, who founded Tron in 2017, was sued by the U.S. Securities and Exchange Commission in March for allegedly artificially inflating trading volumes and selling Tron tokens as an unregistered security. Sun said the SEC charges “lack merit.”

Binbin Deng, a representative of Sun, referred Reuters to Tron spokesperson Wong’s statement.

‘BLINDSPOT’

Since its 2008 birth, the Bitcoin blockchain, and since then crypto more widely, have been magnets for criminals drawn by liquidity and a reputation for anonymity. Of all crypto transaction volumes, the illicit share was 0.2% in 2022, down from 2% three years earlier, according to blockchain tracker Chainalysis.

In Israel, Bitcoin seizures have been scarce by comparison with Tron. In 2021, the first year NBCTF published seizure notices, it froze 30 Bitcoin wallets. No Bitcoin wallets appear in notices in the subsequent years.

The Financial Action Task Force, a Paris-based G7 body that fights illicit finance, warned last month that terrorist organisations were seeking to further boost donor anonymity, citing the growing popularity of Tether transfers on Tron.

Four of the people consulted by Reuters said law enforcement’s increased capability to trace transactions on Bitcoin was driving such groups to Tron.

Tron initially drew less attention from blockchain analysis firms, said Shlomit Wagman, a senior fellow at Harvard University who was director-general of the Israel Money Laundering and Terrorism Financing Prohibition Authority from 2016 to 2022.

“There was until now this blindspot,” she said.

Transaction fees on Tron cost far less than on Bitcoin, U.S. investment firm VanEck says. Militant groups were also using stablecoins on Tron instead of more volatile bitcoin tokens to ensure the “value of their crypto is being preserved,” Wagman said.

(Reporting by Tom Wilson and Elizabeth Howcroft in London, additional reporting by Nidal al-Mughrabi in Gaza and Maya Gebeily in Beirut ; Editing by Frank Jack Daniel)