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Israeli law enforcement has ordered the closure of dozens of cryptocurrency accounts and seized millions of dollars worth of cryptocurrencies as they step up their long-running efforts to cut ties between cryptocurrency markets and Hamas following its attack on the country.
People directly familiar with Israel’s enforcement actions told the Financial Times that more than 100 accounts at Binance – the world’s largest crypto exchange – have been closed since the Hamas attack began on October 7. Authorities have also requested information on up to 200 additional crypto accounts, most of which are held on Binance, the people said.
Binance confirmed that it had “suspended” a “small number” of accounts since the summer, adding that it “follows internationally recognized sanctions rules.” It declined further comment.
Governments and regulators have warned for years that terrorist organizations could use weakly regulated crypto markets to receive and transfer money. But the attack on Israel, followed by numerous crypto-based fundraising efforts by Hamas and related organizations, has made these concerns even more pressing.
“In this time of war, cryptocurrency is an important issue for terrorist financing because there are no other options,” said Tom Alexandrovich, executive director of Israel’s National Cyber Directorate. “The sum [of crypto funds] have increased sharply since the attack began,” he added.
On Monday, Tether, whose digital token is widely used for crypto trading, said it had frozen 32 addresses worth more than $873,000 that it said were linked to “terrorism and war” in Israel and Ukraine stand. It was not announced when the accounts were blocked or the assets were divided between Israel and Ukraine.
According to Israeli law enforcement documents obtained by the Financial Times, several social media posts over the past week solicited cryptocurrency donations to Hamas-affiliated organizations.
People familiar with Israel’s enforcement efforts said around 150 fundraising initiatives linked to Hamas and other groups have been identified since Oct. 7. Last week, Israeli police said in a social media post that they had frozen an unspecified number of accounts used by Hamas for fundraising. It declined to comment on Binance.
US financial regulators have alleged that funds held on Binance have had ties to Hamas in the past. A Commodity Futures Trading Commission lawsuit against the exchange in March alleged that senior Binance executives received information “about Hamas transactions” in 2019.
A Binance employee at the time told colleagues that terrorists typically send “small amounts” because “large amounts constitute money laundering,” the lawsuit says. Another joked that someone “can barely buy an AK-47 for $600.” Binance has announced that it will take action against the lawsuit.
According to Israeli officials, Israeli law enforcement officials had already been tracking crypto accounts suspected of having ties to terrorism financing before the attack. A person with direct knowledge of Binance’s sanctions and compliance procedures said information on “hundreds” of accounts on the exchange had been requested.
“The scale is much bigger now [for Binance] than it was before [Oct 7]said the Binance employee.
“Every time Hamas publishes a donation address, the company has to go back and find all Binance customers who came into contact with that address,” the person added.
Israeli authorities are also drawing on the public’s assistance to identify and track the flow of suspicious funds across crypto markets. According to Alexandrovich, the volunteer task force is “super important” and multiplies official resources “by the dozen.”
Over the past two years, Israeli authorities have seized millions of shekels in crypto accounts they suspected of having ties to Hamas and other militant organizations in the Middle East.
In August, analytics firm Elliptic found that crypto wallets linked to several suspicious Middle Eastern groups had at times transacted with each other and that the groups had also relied on the same crypto exchange services in the past to convert their cryptocurrencies into government currencies.
After another shutdown in June, Israeli Defense Minister Yoav Gallant said combating terrorist financing “becomes even more complex when it comes to digital currencies.” Global regulators such as the Financial Stability Board are working on a framework to combat terrorist financing in crypto assets.
“I think governments need to focus on how quickly technology is evolving. . . Terrorists are smart and we have to track them down,” Alexandrovich said.