Israel Seizes Millions in Crypto from Iranian Military

Updated: 28 June 2023

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According to reports by the Israeli Defense Ministry, the Israeli government has seized millions of dollars in digital funds from accounts intended for use by two powerful Iranian-backed groups, Iranian military and the Hezbollah militant group.

Israel Seized $1.7M in #Crypto From Iranian Military and Hezbollah With Chainalysis' Aid#Web3Wiser

— The hissing ᛤLINK (@allinlinker) June 28, 2023

The operation, carried out by Israeli intelligence agencies, aimed at disrupting the funding networks of these Iranian proxies, as they have been known to utilize cryptocurrencies for illicit activities.

Additionally, both groups have been designated by the United States and some other states as terrorist organizations, locking them out of the conventional global financial system.

This makes it the first time any agency has seized cryptocurrency from Hezbollah and Iran’s Quds Force, based on reports from Chainalysis.

Million in Various Cryptocurrencies Seized

The Israeli authorities, working with other agencies in the country, successfully identified and seized approximately $1.7 million in cryptocurrencies. Over 40 addresses were on the seizure list, and all funds were in USDT on the TRON network (USDT-TRON).

The pattern of movement reflected that assets were first moved from financial facilitators to hawala services and OTC brokers and then to Hezbollah-controlled addresses at mainstream exchanges.

According to a government communiqué, the seizure of the different crypto wallets came after Defense Minister Yoav Gallant approved the move several weeks ago.

The efforts brought together Israel’s Mossad spy agency, its military intelligence office, the Israeli police, and others.

Gallant states, “This is the first event of this magnitude in which an infrastructure headed by Hezbollah and the Iranian Quds Force that transferred millions of dollars for use by terrorist elements was thwarted.”

He was adamant in showing the extent of the seizure, speaking at the third crypto conference of the National Bureau for Counter Terror Financing in Israel’s Ministry of Defense.

However, Israel has previously seized digital funds belonging to the Hamas group that rules the Gaza Strip as part of counterterrorism financing investigations.

Earlier this month, Israeli security agencies seized around 190 accounts on #Binance for having ties to the Hamas terror group in Palestine. Two of the accounts, according to Israel, belonged to the extremist group #ISIS.#BNB #BTC #crypto #eth

— Michelle Fuentes (@Michelle_FFx) June 27, 2023

Gallant was keen to note that Hizbullah and the Quds Force illegally used virtual currencies to receive funds from third parties to finance their militant activities. According to Gallant, the seizure should warn “whoever finances terror” that Israel has developed tools and techniques to identify those involved in such transactions.

Use of Cryptocurrencies Provides Certain Level of Anonymity

The operation by the Israeli government comes in response to the increasing use of cryptocurrencies by terrorist organizations and other illegal actors to bypass traditional financial systems and evade detection.

As a result, individuals often prefer to use cryptocurrencies like Bitcoin for illicit transactions due to the perception that they are difficult to trace. This is because cryptocurrencies provide a certain level of anonymity and ease of cross-border transactions.

Governments and law enforcement agencies worldwide have been grappling with the challenges posed by the criminal exploitation of cryptocurrencies. Therefore, the operation by Israel’s government underscores the Israeli government’s commitment to countering the financing of terrorism and curbing the influence of Iranian proxies in the region.

By disrupting the financial networks of illegal groups, governments aim to weaken their capabilities and protect their national security interests.

Governments around the world are placing greater emphasis on implementing strong regulations and enhancing their abilities to track and confiscate illegally acquired digital assets.

The recent seizure serves as a reminder that cryptocurrencies are not exempt from law enforcement actions. It underscores the fact that authorities are actively working to combat illicit activities in the crypto space.