Israel: police seizes crypto assets on Hamas wallets

Israel Police forces have managed to seize crypto assets on the wallets of some crypto exchanges, and belonging to accounts used by Hamas to collect donations from social networks. 

A local Israeli source revealed that the police’s Cyber Unit Lahav 433 cooperated with the Defense Ministry’s National Headquarters for Combating Economic Terrorism (MTL), the Shin Bet and other intelligence agencies, as well as a number of crypto exchanges including in particular Binance, to carry out the operation. 

Seizure of crypto assets on wallets: latest news from Israel 

Obviously, this is not the direct seizure of the wallets, since the police did not have access to the seeds or private keys of the addresses used by Hamas to have cryptocurrency donations sent to them. 

Once the tokens were deposited on the wallets of the centralized exchanges, however, it was possible to work with them to have those funds received on the public addresses linked to Hamas frozen. 

In other words, now those funds are effectively unusable, although for now they remain on the wallets of the exchanges. The goal, however, is to transfer them to the Israeli state treasury. 

Crypto Unit Lahav 433 is constantly working to identify crypto platforms used by terrorist organizations to raise funds, so it was already prepared to follow recent flows even before they began to raise funds. 

What’s more, with the outbreak of war Hamas launched a public fundraising campaign on social networks, explicitly asking people to send cryptocurrencies to their addresses. So Lahav 433 and MTL took immediate action to identify such accounts and have them frozen by the exchanges. 

In this way practically anyone who sent cryptocurrencies to those addresses, hoping to fund Hamas, would in the end instead actually fund the Israeli government. 

Israel: Binance’s role in the crypto seizure case on wallets

Binance apparently merely cooperated with the authorities, and froze the funds sent to the public addresses linked to Hamas. 

It is not yet clear whether it has also already transferred those funds to Israeli authorities or not. 

What is curious is that in March, the US CFTC denounced the exchange, holding it responsible for, among other things, helping some criminal organizations raise funds in a similar way. 

According to this complaint, in 2019 Binance received information regarding precisely some transactions apparently linked to Hamas, but the exchange’s compliance officer, Samuel Lin, said in internal correspondence that he was fine with it. The fact is that these were very small amounts, so much so that they were not considered true forms of money laundering. 

This time, however, the cooperation apparently was total and immediate. 

It should be remembered that Hamas is internationally recognized as a genuine terrorist organization, which makes the law require any organization, including banks and trading platforms, to cooperate with the authorities. Binance in other words had no choice. 

It should also be specified that the freezing of funds does not generically affect accounts owned by Palestinian civilians, but only those in accounts directly linked to the Hamas terrorist organization.

However, the figure for the amount of cryptocurrencies seized in this way, nor their dollar countervalue, has not been disclosed. 

Binance’s reaction

In addition to this, the exchange’s co-founder, Yi He, also commented on this matter on WeChat. 

After reiterating that Hamas is a terrorist organization recognized as such by the United Nations, and therefore Binance could not do otherwise, he also added that while Palestine has an organized government, Hamas is just a local militant group that also kills civilians. 

He wrote: 

“Hamas is not Palestine; the freeze is targeted towards Hamas, not Palestine.” 

In other words, Palestinian users of Binance in theory should be able to continue using the platform as usual. 

Donations to Israel

Instead, crypto donations to Israel continue without apparent hiccups. 

In fact, an initiative called “Crypto Aid Israel,” or a real charity campaign to help Israeli civilians affected by the conflict, has been launched. 

Therefore, these are not donations aimed at helping the Israeli authorities, but instead aimed at helping ordinary citizens of Israel in need because of the war launched by Hamas. 

So far, more than $10,000 in BTC, ETH, USDT and other ERC-20 tokens have been collected. 

This initiative was launched by a local Web3 collective, which includes a number of local crypto companies and organizations including the Israeli Blockchain Association. 

In addition to helping the families of those killed and captured, the funds will also be used to help the families of the military and first responders, and to rebuild southern Israel in the future.