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ISRAEL has confiscated over 190 cryptocurrency accounts at Binance since 2021, including two it claims are tied to ISIS.
Documents released by Israel's counter-terrorism officials suggest that dozens more were held by Palestinian enterprises linked to the Islamist Hamas organisation.
According to one of the documents on the NBCTF's website, Israel's National Bureau for Counter Terror Financing (NBCTF) confiscated two Binance accounts and their contents in January. The confiscation was intended to "thwart the activity" of the Islamic State and "impair its ability to further its goals," according to the NBCTF's website.
The NBCTF document, which had not previously been publicised, included no information on the value of the crypto recovered or how the accounts were linked to Islamic State.
Binance, the world's largest cryptocurrency exchange by trading volume, did not respond to Reuters' requests for comment.
The Israeli defence ministry, which is in charge of the NBCTF, did not immediately respond to a request for comment from Reuters.
Under Israeli legislation, the country's defence minister has the authority to order the seizure and confiscation of assets tied to terrorism.
Regulators throughout the world have long urged for greater regulations on cryptocurrency exchanges to prevent criminal activities ranging from money laundering to terrorism financing. The seizures by Israel's NBCTF demonstrate how governments are targeting cryptocurrency companies in their efforts to combat unlawful behaviour.
Binance, which was created in 2017 by CEO Changpeng Zhao, claims on its website that it examines information requests from governments and law enforcement agencies on a case-by-case basis, giving information as needed by law.
Binance has also stated that it screens users for terrorism ties and has "continued to invest tremendous resources to enhance its compliance programme," in response to U.S. senators' requests for details on Binance's regulatory compliance and finances in March.
GROUP OF MILITANTS
Following the civil war in Iraq, the Islamic State emerged in Syria. It held a third of Iraq and Syria at its peak in 2014 before being driven back. Islamic State terrorists are being pushed underground, although they continue to carry out guerrilla actions. In a study last year, the US Treasury stated that the Islamic State had received cryptocurrency payments that they later turned to cash, gaining access to revenues through crypto trading platforms. The Treasury provided no specifics and declined to comment for this piece.
According to the NBCTF document, the owner of the two Islamic State-linked Binance accounts confiscated by Israel was a 28-year-old Palestinian named Osama Abuobayda. Abuoyada did not react to requests for comment sent to the NBCTF's email addresses or phone number.
Last year, Reuters revealed that Binance purposely maintained lax anti-money laundering safeguards. According to Reuters, Binance has processed over $10 billion in payments for criminals and organisations attempting to avoid US sanctions since 2017. Binance challenged the publications, claiming that the illicit-fund computations were incorrect and that the depiction of its compliance systems were "outdated."
According to a letter from German police to Binance, two guys suspected of supporting an Islamist shooter who killed four people in Vienna in 2020 used the platform. Later, the Islamic State claimed responsibility for the attack.
Binance's legal representatives stated last year that the company shared client information with the police. Reuters was unable to confirm this independently.
EXCHANGERS OF MONEY
According to the NBCTF papers, three Palestinian currency exchange firms owned nearly all of the 189 Binance accounts confiscated by Israel since December 2021.
According to a list on the NBCTF's website, the three are listed by Israel as "terrorist organisations" for their suspected involvement in the transfer of finances by Hamas, which governs the Palestinian area of Gaza.
The NBCTF announced in a document last month that it had confiscated cryptocurrency worth more than 500,000 shekels ($137,870) from over 80 Binance accounts linked to three Gaza-based organisations, Al Mutahadun For Exchange, Dubai Company for Exchange, and Al Wefaq Co. For Exchange.
The accounts belonged to "terrorist organisations" or were used for a "severe terror crime," according to the paper, which did not elaborate. Local Israeli media outlets had previously reported the April raids.
According to a source with direct knowledge of Al Mutahadun, it does not work "at all" with crypto or collaborate with Hamas. "We are a money exchange firm." "All Israeli allegations are false and unfounded," the source claimed.
According to the NBCTF list, Israel designated Al Mutahadun as a "terrorist organisation" in May 2021.
Al Wefaq and Dubai Co. did not respond to Reuters' email and WhatsApp attempts for comment.
Binance did not react to Reuters' enquiries on the three currency exchange companies' accounts.
According to Hamas spokesperson Hazem Qassem, the organisation has no ties to money exchange companies. The charges about the companies' ties were an attempt by Israel to "justify its economic war against Gaza and its people," according to Qassem.
Following an increase in "hostile" activity against donors, Hamas' armed wing announced last week that it would no longer accept bitcoin donations.
The US Commodity Futures Trading Commission (CFTC) has charged Binance, its CEO Zhao, and its former compliance officer Samuel Lim with "wilful evasion" of US commodities rules.
The charges, according to Zhao, are a "incomplete recitation of the facts."
According to the CFTC's complaint, Lim acquired information on Hamas' Binance transactions in 2019. Lim informed a coworker that "terrorists" normally send little sums of money because "large sums constitute money laundering," according to the CFTC complaint. Lim has not replied publicly to the allegations. He did not react to Telegram messages requesting comment for this report. (1 shekel = 3.6266 shekels)
By fLEXI tEAM
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