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Israeli law enforcement authorities have ordered dozens of cryptocurrency accounts to be closed and seized millions of dollars’ worth of crypto coins as they step up longstanding efforts to cut links between crypto markets and Hamas after its attack on the country.
People directly familiar with Israel’s enforcement actions told the Financial Times that more than 100 accounts on Binance — the world’s largest crypto exchange — had been closed since Hamas’s assault 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 it had “blocked” a “small number” of accounts since the summer and added that it “follows internationally recognised sanctions rules”. It declined to provide further comment.
Governments and regulators have warned for years that terrorist organisations could be using lightly regulated crypto markets to receive and transfer money. But the attack on Israel, followed by numerous crypto-based fundraising efforts by Hamas and related entities, has made those concerns more urgent.
“In this period of war, cryptocurrency is a major issue for financing terror because there are no other options,” said Tom Alexandrovich, executive director at the Israel National Cyber Directorate. “The amount [of crypto funds] have super-increased since the attack began,” he added.
On Monday Tether, whose digital token is widely used for crypto trading, said it had frozen 32 addresses, containing more than $873,000, that it said had been linked to “terrorism and warfare” in Israel and Ukraine. It did not disclose when the accounts were blocked or the split in assets between Israel and Ukraine.
Multiple social media posts over the past week have sought donations in cryptocurrencies to Hamas-related organisations, according to Israeli law enforcement documents seen by the Financial Times.
People familiar with Israel’s enforcement operation said roughly 150 donation initiatives affiliated with Hamas and other groups have been identified since October 7. Last week, the Israeli police force said in a social media post that it had frozen an unspecified number of accounts used by Hamas for fundraising. It declined to comment on Binance.
US financial regulators have alleged that money held on Binance has had links with Hamas in the past. A Commodity Futures Trading Commission lawsuit against the exchange in March alleged that senior Binance executives had received information “regarding Hamas transactions” in 2019.
A Binance employee at the time told colleagues that terrorists usually send “small sums” because “large sums constitute money laundering”, the lawsuit said. Another joked that someone “can barely buy an AK-47 with 600 bucks”. Binance has said it will fight the suit.
Even before the attack, Israeli law enforcement officials had been tracking crypto accounts suspected of links to terrorism financing, according to Israeli officials. A person with direct knowledge of Binance’s sanctions and compliance procedures said information has been requested regarding “hundreds” of accounts on the exchange.
“The scale is now much bigger [for Binance] than it was before [Oct 7],” the Binance employee said.
“Every time Hamas publishes an address for donations, the company has to go back and find all the Binance customers that have had exposure to this address,” the person added.
Israeli authorities are also drawing on assistance from the public 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 dozens”.
In the past two years Israeli authorities have seized millions of shekels in crypto accounts which they suspected of having links to Hamas and other militant organisations in the Middle East.
In August, analytics firm Elliptic found that crypto wallets associated with multiple suspicious Middle East groups had at times transacted with one another, and that the groups also historically relied on the same crypto exchange services in an attempt to convert their crypto into sovereign currencies.
After another shutdown in June, Israeli defence minister Yoav Gallant said combating terror financing becomes “even more complex when digital currencies are involved”. Global regulators such as the Financial Stability Board are working on a framework for tackling terrorist financing in crypto assets.
“I think governments need to focus on how fast the technology moves . . . terrorists are smart, and we need to track them,” said Alexandrovich.
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