Israel Cracks Down on Crypto Funding for Terrorism, Seizes $1.7M Linked to Hezbollah and Quds Force

Israel seizes $1.7M from crypto accounts linked to Hezbollah and Quds Force. Major operation exposes cryptocurrency route for financing terrorism.

Jun 28, 2023 - 10:08
Jun 28, 2023 - 10:09
Israel Cracks Down on Crypto Funding for Terrorism, Seizes $1.7M Linked to Hezbollah and Quds Force
Israel Cracks Down on Crypto Funding for Terrorism, Seizes $1.7M Linked to Hezbollah and Quds Force

In a significant development, Israel has executed a groundbreaking operation, confiscating approximately $1.7 million from around 40 cryptocurrency wallets associated with Hezbollah and the Islamic Revolutionary Guard Corps' (IRGC) Quds Force. This operation, described as the first of its magnitude by Defense Minister Yoav Gallant, aims to disrupt the financing of terrorism through digital currencies.

Uncovering the Route for Financing Terror:

During a conference hosted by the National Bureau for Counter Terror Financing (NBCTF), Defense Minister Gallant disclosed that this extensive operation successfully exposed a channel used by Hezbollah, the Quds Force, and certain "Syrian elements" to finance their activities using cryptocurrencies. The funds were traced to third-party sources and subsequently transferred to the terrorist groups through money exchangers.

Blockchain Analytics and Collaborative Efforts:

Israel's NBCTF, in collaboration with the Mossad spy agency, the IDF's Military Intelligence Directorate, the Israel Police, and other agencies, employed cutting-edge tools to carry out this operation. The integration of blockchain analytics, including tools provided by Chainalysis, played a vital role in achieving this significant national security milestone.

Hezbollah's Cryptocurrency Financing:

Hezbollah, a Lebanese political and military organization renowned for its resistance against Israeli forces, has traditionally relied on funding from Iran, often facilitated through Syrian intermediaries. However, recent observations have indicated a shift in some of this activity towards cryptocurrencies. Notably, financial facilitators initially move funds to hawala services and over-the-counter (OTC) brokers before ultimately transferring them to Hezbollah-controlled addresses on mainstream exchanges.

Implications and Ongoing Challenges:

This landmark seizure by the NBCTF holds paramount importance due to its broader implications. It not only marks the first instance of cryptocurrency seizure from Hezbollah and the Quds Force but also highlights the sophisticated use of digital currencies by state actors to finance dangerous terrorist organizations. This development underscores the ongoing battle against terrorism financing through cryptocurrencies, emphasizing the need for continued vigilance and collaborative efforts.

The Fight Against Cryptocurrency-Funded Terrorism:

While significant progress has been made in combating terrorism financing in the crypto space, challenges persist. Notably, the Palestinian militant group Hamas, which had previously relied on crypto donations to circumvent international sanctions, discontinued its crypto donations program under pressure from law enforcement agencies. However, the recent operation serves as a reminder that the fight against terrorism financing through cryptocurrencies is far from over.

Previous Israeli Seizures:

Israel's Defense Ministry has previously announced seizures of cryptocurrency wallets associated with Hamas, another prominent Palestinian militant group. In February 2022, Israeli authorities confiscated "dozens of thousands of Shekels" worth of cryptocurrencies intended for funding the group. Moreover, a seizure in July 2021 resulted in the confiscation of $7.7 million in USDT, Bitcoin, and Dogecoin.

Conclusion: Israel's groundbreaking operation to seize $1.7 million from crypto accounts linked to Hezbollah and Iran's Quds Force showcases the country's commitment to combating terrorism financing in the digital realm. By leveraging advanced blockchain analytics and collaborative efforts, Israel aims to disrupt the flow of funds to dangerous terrorist organizations. This successful operation highlights the ongoing challenges in the battle against cryptocurrency-funded terrorism and underscores the need for continued vigilance in this evolving landscape.

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