Israel seized Binance crypto accounts to ‘thwart’ Islamic State, document shows By Reuters

Written by Tom Wilson and Angus Berwick

LONDON (Reuters) – Israel has seized about 190 encrypted accounts on the Binance exchange since 2021, including two it said were linked to the Islamic State group and dozens more it said were owned by Palestinian companies linked to the Islamist group Hamas, according to documents released by Israel. Anti-terrorism authorities appear in the country.

One of the documents posted on the NBCTF website showed that on January 12, Israel’s National Bureau for Combating Terrorist Financing (NBCTF) seized the two Binance accounts and their contents. On its website, the committee said the confiscation was to “thwart the activity” of the Islamic State and “weaken its ability to achieve its goals”.

The NBCTF document, which was not previously reported, provided no details about the value of the cryptocurrency that was seized, nor how the accounts were linked to the Islamic State.

Binance, the world’s largest cryptocurrency exchange by trading volume, did not respond to calls and emails to Reuters seeking comment.

Israel’s Defense Ministry, which is responsible for the NBCTF, did not immediately respond to a Reuters request for comment.

Under Israeli law, the Minister of Defense can order the seizure and confiscation of assets that the Ministry deems to be linked to terrorism.

Regulators globally have long called for tighter controls on cryptocurrency exchanges to prevent illegal activities, from money laundering to terrorist financing. The Israeli NBCTF seizure highlights how governments are targeting crypto companies in their efforts to prevent illegal activity.

Binance, which was founded in 2017 by CEO Changpeng Zhao, says on its website that it reviews information requests from governments and law enforcement agencies on a case-by-case basis, and discloses information as legally required.

Binance also said it was checking users for links to terrorism and continued to “invest enormous resources to enhance its compliance program,” it told US senators in March in response to their requests for information about Binance’s regulatory compliance and funding.

armed group

The Islamic State emerged in Syria after the civil war in Iraq. At its peak in 2014, it controlled a third of Iraq and Syria, before being defeated. Now, forced underground, Islamic State fighters continue to stage insurgent attacks.

The US Treasury Department said in a report last year that the Islamic State group received cryptocurrency donations that it later converted into cash, as it gained access to the funds via cryptocurrency trading platforms. The Treasury Department did not identify which platforms and declined to comment for this article.

The NBCTF document shows that the owner of the two Islamic State-linked Binance accounts seized by Israel was a 28-year-old Palestinian named Osama Abu Obeida. Abu Ayadah did not respond to requests for comment via email addresses and phone numbers listed in the NBCTF document.

In a series of investigations last year, Reuters reported that Binance deliberately maintained weak anti-money laundering controls. Since 2017, Binance has processed more than $10 billion in payments to criminals and companies seeking to evade US sanctions, Reuters reports. Binance disputed the articles, calling illicit funds accounts inaccurate and describing their compliance controls as “outdated.”

A message from German police to the company said that two men Germany suspects of aiding an Islamist gunman who killed four people in Vienna in 2020 used the Binance platform. The Islamic State later claimed responsibility for the attack.

Its legal representatives said last year that Binance shared information with the police about customers. Reuters could not independently confirm this.

exchange

NBCTF documents showed that all 189 Binance accounts seized by Israel since December 2021 were owned by three Palestinian exchange companies.

The three have been designated by Israel as “terror organizations,” according to a listing on the NBCTF website, for their alleged involvement in money transfers by Hamas, which administers the Palestinian territories in Gaza.

Last month, the NBCTF said in a document that it had confiscated more than NIS 500,000 worth of cryptocurrency ($137,870) from more than 80 accounts on Binance owned by three Gaza-based companies, United Exchange, Dubai Exchange and Al Wefaq Exchange. .

The accounts were owned by “terrorist organizations” or used in a “serious terrorist offence,” the document said, without elaborating. Local media in Israel had earlier reported the April confiscation.

A person familiar with al-Mutahidoun said it does not “at all” work with encryption or cooperate with Hamas. “We are an exchange company. The Israeli allegations are all lies and baseless,” the source said.

The NBCTF list shows that The Challengers was designated a “terrorist organization” by Israel in May 2021.

Wefaq and the Dubai company did not respond to Reuters requests for comment via email and WhatsApp.

Binance did not respond to Reuters’ questions about the accounts owned by the three exchange firms.

Hamas spokesman Hazem Qassem said that Hamas has nothing to do with exchange companies. Qassem said that the allegations of links to the two companies are an attempt by Israel to “justify its economic war on Gaza and its people.”

Last week, the military wing of Hamas said it would stop receiving funds in bitcoin after an increase in “hostile” activities against donors.

Binance and its CEO Zhao and former compliance chief Samuel Lim are facing civil charges from the US Commodity Futures Trading Commission (CFTC) for “willful evasion” of US commodity laws.

Zhao called the accusations an “incomplete recitation of the facts”.

In its complaint, the CFTC said Lim received information in 2019 about Hamas’s transactions on Binance. Lim told his colleague that “terrorists” usually send small amounts of money, because “large amounts constitute money laundering,” according to the CFTC complaint.

Lim has not publicly responded to the accusations. He did not respond to messages sent via Telegram seeking comment for this article.

($1 = 3.6266 shekels)