
Terrorism & Israel-Gaza war weaponized to destroy crypto
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2 years agoon
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adminThe Israel-Gaza war has once again thrown the spotlight on crypto, with anti-crypto politicians seizing on exaggerated reports of crypto being used to finance terrorism to introduce harsh new legislation with the potential to crush the industry.
Three days after Hamas carried out its brutal Oct. 7 attack, The Wall Street Journal published an inflammatory article stating that in the past three years, U.S.-designated terrorist organizations such as Hamas, Palestinian Islamic Jihad and Hezbollah had raised $134 million in crypto.
The article — later corrected following an online backlash — became ammunition for the anti-crypto army in Washington, which cited it to push for ever greater restrictions on crypto.
That came to a head over the past week with a bipartisan bill called the Terrorism Financing Prevention Act, introduced on Dec. 8. It obliges the Treasury to identify foreign financial institutions and crypto platforms that have knowingly conducted transactions with U.S.-designated terrorist outfits and enables it to impose sanctions to restrict U.S. bank accounts and block transactions.
Senator Mitt Romney tied the bill specifically to the Israel-Gaza war:
“The Oct. 7 attacks on Israel perpetrated by Hamas have made it more urgent and necessary for the U.S. to counter the role that cryptocurrency plays in the financing of terrorism.”
The war has also given new impetus to Senator Elizabeth Warren’s bipartisan Digital Asset AML Act (DAAMLA), which would extend the Bank Secrecy Act to cryptocurrencies. Five more senators signed up to cosponsor this bill on Dec. 11, and there are now 19 senators in total backing the legislation — or one in five senators — meaning it has gained serious traction. Galaxy’s head of firmwide research, Alex Thorn, argues “Warren’s bill would effectively outlaw crypto in America.”
Thorn believes that despite Warren’s poor record in getting bills passed, this one has a chance, given the “potent terrorism narrative post 10/7” and the “razor-thin R majority in House makes hard to thwart.”
Another earlier bill is also in play, the Crypto Asset National Security Enhancement (CANSEE) Act, which would dramatically increase surveillance over crypto transactions.
Warren appeared on CNBC’s Squawk Box last week to claim that all the major bank CEOs agreed with her on the need for urgent action.
“We have a serious problem in this country,” she said. “And that is a part of the financial system is being used by terrorists, by drug traffickers, by rogue nations, in order to launder money, move money through the system and finance their illegal activities.”
She said Congress needed to update the Bank Secrecy Act to cover crypto “because there’s a new threat out there — it’s crypto, and it is being used for terrorist financing. It is being used for drug trafficking. North Korea is using it to pay for about half of its nuclear weapons program. We can’t allow that to continue.”
Of course, cutting off funding to terrorists and preventing money laundering are laudable aims. But the unintended consequences (some argue they are intentional) pose a serious threat to the industry.
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The Blockchain Association’s Kristin Smith argues that applying the Bank Secrecy Act to crypto defeats “the entire purpose of blockchains” and believes the legislative clampdowns would push the vast majority of the industry overseas.
Referring to CANSEE and DAAMLA bills, Smith says, “Following any crisis — or sensational media report — Washington feels the urge to do something, which is understandable,” But, she warned:
“If enacted, these bills would effectively destroy the American digital asset industry.”
Crypto terrorism links sexed up
The link between terrorism and crypto is invariably hyped up by opponents. For example, Warren’s claim that “half” of North Korea’s nukes are financed by crypto hacks comes from a recent Recorded Future report. However, the report clearly shows the figure is speculative, and the authors admit “it is unclear exactly how much of the stolen cryptocurrency ends up directly financing ballistic missile launches.”
The original WSJ article was also wrong, as demonstrated by a more careful analysis of the methodology of WSJ’s sources from Castle Island Ventures’ Nic Carter, as well as Chainalysis. Most of the terror financing goes through crypto service providers, and the analysis confused the much larger pool of funds on the platform with the amount received by terrorism-linked addresses.

In one instance, it appeared the WSJ had likely confused the total amount in a crypto service provider’s address ($82 million) with the funds probably unwittingly sent to a terror-affiliated wallet ($450,000). According to Chainalysis, the analysis had been conducted by amateurs:
“To the untrained eye, it might appear that $82 million worth of cryptocurrency was raised for terror financing in the example above. But it is much more likely that a small portion of these funds were intended for terrorist activity, and a majority of the funds processed through the suspected service provider were unrelated.”
The actual amount of crypto raised and received by terrorists in total was much smaller than the “as much as” $134 million cited. The WSJ reluctantly corrected its article but remained adamant that its main points were true.
One reason the story is such a beat-up is that U.S. regulators and Israel’s National Bureau for Counter Terror Financing (NBCTF) seized most crypto wallets used to launder the Hamas donations back in 2021.
They successfully identified donors, froze accounts, and shut down fundraising websites, which led Hamas to view cryptocurrency as “inconvenient” for its purposes and to limit itself to more traditional means of fundraising.
“In fact, it’s possible that no one understands the challenges of using cryptocurrency for fundraising better than Hamas,” notes Chainalysis. In April this year, Al-Qassam Brigades, the military wing of Hamas, announced the shutdown of their longstanding cryptocurrency donation program, citing the likelihood of donors being caught and prosecuted.
Mati Greenspan, the Tel Aviv-based founder and CEO of Quantum Economics, explains, “It’s the very nature of the blockchain that allowed the Mossad to crack down on Hamas’ crypto activities in the first place.”
Andrew Fierman, the head of sanctions strategy at Chainalysis, agrees, noting that Hamas would happily raise money via any method it could, but crypto had not proved to be a good choice:
“Hamas has historically used and likely will continue to facilitate financing via traditional methods through the use of money services businesses (MSB), hawala and shell companies. Cryptocurrency is just another attempted method of financing. However, it has been shown time and time again to not be an effective approach.”
Crypto is involved in some terrorism funding
Nevertheless, the problem of crypto-terrorism funding exists, even if the media and its anti-crypto activists overstate it. Not only terrorist organizations but whole countries are involved. Fierman points out that “Iran has a sizable crypto economy, including many regional exchanges, and it has historically used all different kinds of financial mechanisms to fund groups like Hamas and Hezbollah.”
Iran is a major geopolitical player in the region that has been engaged in a proxy war with Israel for almost 40 years with a declared intention of getting rid of the Jewish state. In June 2023, Israel’s National Bureau for Counter Terror Financing (NBCTF) seized about $1.7 million worth of cryptocurrency from Hezbollah, a Lebanon terrorist group, and from their brothers in arms, Iran’s Quds Force.
Rather than use major currencies like Bitcoin and Ether, terrorists prefer smaller chains, and according to the Reuters analysis, NBCTF froze 143 wallets on Justin Sun’s Tron blockchain between July 2021 and October 2023 that it believed were connected to terrorists.

The battle is ongoing regarding donations to Hamas-linked charities, which raised an estimated 70% more than the period before the 7/10 attack (though there is no estimate for how much of that increase was in crypto). Fierman says that “blockchain analysis should be a constant work to get a whole-of-ecosystem understanding of threat actors.”
Regulators’ crypto/terrorism fears
Meanwhile, a raft of anti-crypto politicians in Washington — where crypto is rapidly turning into another front in the culture war — see blockchain itself as dangerous.
Senator Elizabeth Warren has proudly advertised her “anti-crypto army,” and the WSJ’s inaccurate reporting gave the army the ammunition it needs to once again push for greater regulations to crack down on the use of cryptocurrency for money laundering and terrorism financing.
Senator Warren, along with her colleague Roger Marshall, immediately wrote a letter to the president asking for stricter regulation of the crypto market: “As The Wall Street Journal reports, researchers who study Hamas’s financing said crypto remains one of a number of tools the group uses to raise funds […] We urge you to swiftly and categorically act to meaningfully curtail illicit crypto activity and protect our national security and that of our allies.”
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The fact that the article was inaccurate did not give these legislators any pause for thought, and the Department of Justice’s subsequent $4.3-billion money-laundering settlement with Binance added fuel to the fire.
The attacks by Senators Warren, Chris Van Hollen and Lindsey Graham on the crypto market have been relentless, and they use any pretext to accuse the crypto industry of helping “bad countries” evade sanctions, fund weapons programs, support spying and enable cyberattacks. In that sense. the Israel-Gaza war is just the latest pretext, and if not that, it would be something else.
And it seems that regulators are going to press further. In late November, Deputy Treasury Secretary Wally Adeyemo wrote in a letter to Congress:
“As terrorists, transnational criminals, and rogue states turn to digital assets to finance their activities, we need to build an enforcement regime that is capable of preventing this activity.”
He asked for more power to crack down on illicit activity in crypto, such as jurisdiction over USD stablecoins, new crypto financial institution category under BSA and new secondary sanctions.
It was a pleasure to speak at today’s Blockchain Association Policy Summit, where I focused on the steps we must take to prevent bad actors from using the digital asset ecosystem for illicit activity. pic.twitter.com/HQpwDyFBla
— Deputy Secretary Wally Adeyemo (@TreasuryDepSec) November 30, 2023
For some market players, that means an unprecedented level of transparency. For example, the Binance exchange will have to submit to a “crazy” regulation for the sake of preserving its business. “What was once a haven for anarchic crypto commerce is about to be transformed into the opposite: perhaps the most fed-friendly business in the cryptocurrency industry, retroactively offering more than a half-decade of users’ transaction records to U.S. regulators and law enforcement,” writes Andy Greenspan in Wired.
Proponents argue that the example of Hamas, which was forced to drop crypto donations due to the danger of prosecution, shows that the transparency of blockchain is itself a weapon against terrorism financing. Government agencies and private sector organizations should use blockchain analysis to trace terrorism financing and focus on safety and compliance on the part of all market participants.
There is a certain irony in freedom-hating terrorists embracing crypto, which was created by libertarians, says Quantum Economics’ Greenspan.
“Ultimately, Hamas hates freedom. In Hamas-controlled Gaza, there is no freedom of religion or women’s rights. Gays are executed publicly on a regular basis, and there have not been any elections or even opinion polls since they took control of the strip since they defeated Fatah in 2007.”
“The notion that they are using Bitcoin, which is a monetary system based on freedom, is a bit ironic. It’s as Milton Friedman famously said when predicting Bitcoin in 1999: ‘Of course it has its negative side, the gangsters, people engaged in illegal transactions will have an easier way to carry out their business,’ but ultimately, good always triumphs over evil.”
Community building and cybersecurity
While the terrorist attack and the fears of regulators have a negative impact on the industry, there is also a positive side to crypto, which has made it easier to get aid to victims of the Oct. 7 atrocities.
Immediately after Hamas’ attack, the crypto and Web3 communities created the humanitarian decentralized initiative Crypto Aid Israel. Itai Elizur, the chief operating officer and partner at MarketAcross/InboundJunction and a contributor to Crypto Aid, explains, “It has not only collected money but also increased awareness and made the local system excited by working together.”
While there are other numerous Jewish funds raising money in crypto, they were established prior to the conflict, unlike Crypto Aid Israel. The platform is organized as a multisignature wallet, and it collects donations in Bitcoin, Ether and stablecoins.
Funds are used to rebuild settlements in southern Israel and help the families of those killed and kidnapped, of soldiers, and of those who repelled terrorist attacks in the early days of the conflict. Over $240,000 was collected in less than a month.
Non-institutional cryptocurrency fundraising first came to prominence to raise donations for Ukraine. As of July, $227 million in cryptocurrency has been raised for Ukraine, including $134 million for humanitarian needs and $91 million for military-oriented campaigns.
Elizur says, “The first issue for us was to create trust because there are bad actors doing the same, but there are a lot of mechanisms now with which people are trying to stop them.” Banks and regulators in Israel act as intermediaries between the platform and the recipients’ bank accounts, though Elizur says it was not easy to get permission to transfer the money into Israeli banks.
The furor over Hamas raising funds in crypto has stymied any chance of a similar fund being set up to aid civilians in Gaza affected by the war. Very few charity funds helping people in Gaza (Islamic Aid, Medical Aid for Palestinians, etc.) suggest donating in crypto, except Save The Children, which gathers not only for Gaza but also for Somalia and other countries at risk.
Other ramifications of the war… on crypto
Just like the aftermath of the Russia-Ukraine invasion in 2022, which saw the global cybersecurity market grow 11.6% in the second quarter of 2023, the latest Israel-Hamas conflict could boost the cybersecurity industry. Intelligence agencies are closely watching the blockchain for suspicious transfers, bad actors and illicit funds.
Global tensions ramping up due to the conflict have the potential to stimulate demand for Bitcoin as a safe-haven asset, a hedge against economic downturns. While the price has certainly skyrocketed 55% since the start of the conflict, most observers believe the main factor is speculation over the imminent approval of a Bitcoin ETF in the United States.
But as Greenspan points out, it’s not a bad use case: “The longer the war goes on and the more it spreads, the more this dynamic is likely to play out. I can emphatically say that the correlation between Bitcoin and the stock market that developed during COVID and the 2021 bull run has now broken down completely.”
As for Israel, the conflict is not long and widespread enough yet to raise the need for BTC as a decentralized payment tool beyond governments, although Iran has already been using BTC as a tool for evading sanctions while making oil transactions during the U.S.-Iran conflict in 2021.
The country is so far spared from the scale of inflation that would incentivize people to switch to BTC from the national currency, like in Turkey, where the national currency crashed in 2021 and has not recovered since. And the Middle East conflict so far has not seen a stream of migrants with a need for substitute banking instruments, as we saw in the Russian-Ukrainian conflict. Nevertheless, if the conflict becomes more intense, with multiple parties involved, it may have a bigger impact on BTC demand.
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I’ve followed the PM wherever he goes in his first year in office – here’s what I’ve observed
Published
9 hours agoon
July 4, 2025By
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July 5 2024, 1pm: I remember the moment so clearly.
Keir Starmer stepped out of his sleek black car, grasped the hand of his wife Vic, dressed in Labour red, and walked towards a jubilant crowd of Labour staffers, activists and MPs waving union jacks and cheering a Labour prime minister into Downing Street for the first time in 14 years.
Starmer and his wife took an age to get to the big black door, as they embraced those who had helped them win this election – their children hidden in the crowd to watch their dad walk into Number 10.
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Keir Starmer, not the easiest public speaker, came to the podium and told the millions watching this moment the “country has voted decisively for change, for national renewal”.
He spoke about the “weariness at the heart of the nation” and “the lack of trust” in our politicians as a “wound” that “can only be healed by actions not words”. He added: “This will take a while but the work of change begins immediately.”
A loveless landslide
That was a day in which this prime minister made history. His was a victory on a scale that comes around but one every few decades.
He won the largest majority in a quarter of a century and with it a massive opportunity to become one of the most consequential prime ministers of modern Britain – alongside the likes of Margaret Thatcher or Tony Blair.
But within the win was a real challenge too.
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👉 Click here to listen to Electoral Dysfunction on your podcast app 👈
Starmer’s was a loveless landslide, won on a lower share of the vote than Blair in all of his three victories and 6 percentage points lower than the 40% Jeremy Corbyn secured in the 2017 general election.
It was the lowest vote share than any party forming a post-war majority government. Support for Labour was as shallow as it was wide.
In many ways then, it was a landslide built on shaky foundations: low public support, deep mistrust of politicians, unhappiness with the state of public services, squeezed living standards and public finances in a fragile state after the huge cost of the pandemic and persistent anaemic growth.
Put another way, the fundamentals of this Labour government, whatever Keir Starmer did, or didn’t do, were terrible. Blair came in on a new dawn. This Labour government, in many ways, inherited the scorched earth.
The one flash of anger I’ve seen
For the past year, I have followed Keir Starmer around wherever he goes. We have been to New York, Washington (twice), Germany (twice), Brazil, Samoa, Canada, Ukraine, the Netherlands and Brussels. I can’t even reel off the places we’ve been to around the UK – but suffice to say we’ve gone to all the nations and regions.
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2:03
Starmer pushed on scale of “landslide” election win
What I have witnessed in the past year is a prime minister who works relentlessly hard. When we flew for 27 hours non-stop to Samoa last autumn to the Commonwealth Heads of Government Meeting (CHOGM) summit, every time I looked up at the plane, I saw a solitary PM, his headlight shining on his hair, working away as the rest of us slept or watched films.
He also seems almost entirely unflappable. He rarely expresses emotion. The only time I have seen a flash of anger was when I questioned him about accepting freebies in a conversation that ended up involving his family, and when Elon Musk attacked Jess Phillips.
I have also witnessed him being buffeted by events in a way that he would not have foreseen. The arrival of Donald Trump into the White House has sucked the prime minister into a whirlwind of foreign crises that has distracted him from domestic events.
When he said over the weekend, as a way of explanation not an excuse, that he had been caught up in other matters and taken his eye off the ball when it came to the difficulties of welfare reform, much of Westminster scoffed, but I didn’t.
I had followed him around in the weeks leading up to that vote. We went from the G7 in Canada, to the Iran-Israel 12-day war, to the NATO summit in the Hague, as the prime minister dealt with, in turn, the grooming gangs inquiry decision, the US-UK trade deal, Donald Trump, de-escalation in the Middle East and a tricky G7 summit, the assisted dying vote, the Iran-Israel missile crisis.
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10:50
In September 2024, the PM defended taking £20k GCSE donation
He was taking so many phone calls on Sunday morning from Chequers, that he couldn’t get back to London for COBRA [national emergency meeting] because he couldn’t afford to not have a secure phone line for the hour-long drive back to Downing Street.
He travelled to NATO, launched the National Security Review and agreed to the defence alliance’s commitment to spend 5% of GDP on defence by 2035. So when he came back from the Hague into a full-blown welfare rebellion, I did have some sympathy for him – he simply hadn’t had the bandwidth to deal with the rebellion as it began to really gather steam.
Dealing with rebellion
Where I have less sympathy with the prime minister and his wider team is how they let it get to that point in the first place.
Keir Starmer wasn’t able to manage the latter stages of the rebellion, but the decisions made months earlier set it up in all its glory, while Downing Street’s refusal to heed the concerns of MPs gave it momentum to spiral into a full-blown crisis.
The whips gave warning after 120 MPs signed a letter complaining about the measures, the Work and Pensions Secretary Liz Kendall had done the same, but Starmer and Reeves were, in the words of one minister, “absolutist”.
“They assumed people complaining about stuff do it because they are weak, rather than because they are strong,” said the minister, who added that following the climbdown, figures in Number 10 “just seemed completely without knowledge of the gravity of it”.
That he marks his first anniversary with the humiliation of having to abandon his flagship welfare reforms or face defeat in the Commons – something that should be unfathomable in the first year of power with a majority that size – is disappointing.
To have got it that wrong, that quickly with your parliamentary party, is a clear blow to his authority and is potentially more chronic. I am not sure yet how he recovers.
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2:58
Welfare vote ‘a blow to the prime minister’
Keir Starmer said he wanted to rule country first, party second, but finds himself pinned by a party refusing to accept his centrist approach. Now, ministers tell MPs that there will be a financial consequence of the government’s decision to delay tightening the rules on claiming disability benefits beyond the end of 2026.
A shattered Rachel Reeves now has to find the £5bn she’d hoped to save another way. She will defend her fiscal rules, which leaves her the invidious choice of tax rises or spending cuts. Sit back and watch for the growing chorus of MPs that will argue Starmer needs to raise more taxes and pivot to the left.
That borrowing costs of UK debt spiked on Wednesday amid speculation that the chancellor might resign or be sacked, is a stark reminder that Rachel Reeves, who might be unpopular with MPs, is the markets’ last line of defence against spending-hungry Labour MPs. The party might not like her fiscal rules, but the markets do.
What’s on the horizon for year two?
The past week has set the tone now for the prime minister’s second year in office. Those around him admit that the parliamentary party is going to be harder to govern. For all talk of hard choices, they have forced the PM to back down from what were cast as essential welfare cuts and will probably calculate that they can move him again if they apply enough pressure.
There is also the financial fall-out, with recent days setting the scene for what is now shaping up to be another definitive budget for a chancellor who now has to fill a multi-billion black hole in the public finances.
But I would argue that the prime minister has misjudged the tone as he marks that first year. Faced with a clear crisis and blow to his leadership, instead of tackling that head on the prime minister sought to ignore it and try to plough on, embarking on his long-planned launch of the 10-year NHS plan to mark his year in office, as if the chancellor’s tears and massive Labour rebellions over the past 48 hours were mere trifles.
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1:16
Why was the chancellor crying at PMQs?
It was inevitable that this NHS launch would be overshadowed by the self-inflicted shambles over welfare and the chancellor’s distress, given this was the first public appearance of both of them since it had all blown up.
But when I asked the prime minister to explain how it had gone so wrong on welfare and how he intended to rebuild your trust and authority in your party, he completely ignored my question. Instead, he launched into a long list of Labour’s achievements in his first year: 4 million extra NHS appointments; free school meals to half a million more children; more free childcare; the biggest upgrade in employment rights for a generation; and the US, EU and India free trade deals.
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1:03
Starmer defends reaction to Reeves crying in PMQs
I can understand the point he was making and his frustration that his achievements are being lost in the maelstrom of the political drama. But equally, this is politics, and he is the prime minister. This is his story to tell, and blowing up your welfare reform on the anniversary week of your government is not the way to do it.
Is Starmer failing to articulate his mission?
For Starmer himself, he will do what I have seen him do before when he’s been on the ropes, dig in, learn from the errors and try to come back stronger. I have heard him in recent days talk about how he has always been underestimated and then proved he can do it – he is approaching this first term with the same grit.
If you ask his team, they will tell you that the prime minister and this government is still suffering from the unending pessimism that has pervaded our national consciousness; the sense politics doesn’t work for working people and the government is not on their side.
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Starmer knows what he needs to do: restore the social contract, so if you work hard you should get on in life. The spending review and its massive capital investment, the industrial strategy and strategic defence review – three pieces of work dedicated to investment and job creation – are all geared to trying to rebuild the country and give people a brighter future.
But equally, government has been, admit insiders, harder than they thought as they grapple with multiple crises facing the country – be that public services, prisons, welfare.
It has also lacked direction. Sir Keir would do well to focus on following his Northern Star. I think he has one – to give working people a better life and ordinary people the chance to fulfil their potential.
But somehow, the prime minister is failing to articulate his mission, and he knows that. When I asked him at the G7 summit in Canada what his biggest mistake of the first year was, he told me: “We haven’t always told our story as well as we should.”
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3:42
Beth Rigby asks the PM to reflect on a year in office
I go back to the Keir Starmer of July 5 2024. He came in on a landslide, he promised to change the country, he spoke of the lack of trust and the need to prove to the public that the government could make their lives better through actions not words.
In this second year, he is betting that the legislation he has passed and strategies he has launched will drive that process of change, and in doing so, build back belief.
But it is equally true that his task has become harder these past few weeks. He has spilled so much blood over welfare for so little gain, his first task is to reset the operation to better manage the party and rebuild support.
But bigger than that, he needs to find a way to not just tell his government’s story but sell his government’s story. He has four years left.
Politics
Did Keir Starmer screw up his own anniversary?
Published
9 hours agoon
July 4, 2025By
admin
👉 Click here to listen to Electoral Dysfunction on your podcast app 👈
Sir Keir Starmer wanted to be talking about what he sees as Labour’s achievements after 12 months in government and his 10-year plan for the NHS.
But, after another dramatic policy U-turn and the sight of his own chancellor crying at PMQs, when he kept his support for her slightly vague, Beth Rigby, Harriet Harman and Ruth Davidson discuss if his start in office has been shattered by this week.
They also wonder if the solution to make relations with his own MPs a bit easier would be to make better use of Angela Rayner.
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