Israel seizes scores of Binance crypto accounts ‘over terrorism’

London — Israel has seized about 190 crypto accounts at crypto exchange Binance since 2021, including two it said were linked to Islamic State (IS) and dozens of others it said were owned by Palestinian firms connected to the Islamist Hamas group, documents released by the country’s counterterror authorities show.

Israel’s National Bureau for Counter-Terror Financing (NBCTF) on January 12 confiscated two Binance accounts and their contents, one of the documents on the NBCTF’s website shows. The seizure was to “thwart the activity” of IS and “impair its ability to further its goals”, the bureau says on its website.

The NBCTF document, which has not been previously reported, does not give details on the value of the crypto seized, nor how the accounts were connected to IS.

Binance, the world’s largest crypto exchange by trading volumes, did not respond to Reuters’ calls and emails seeking comment before this article was published on Thursday.

In a blog post after its publication, Binance said that Reuters was “deliberately leaving out critical facts”.

The exchange has been “working closely with international counter-terrorism authorities” on the seizures, Binance said. “With regard to the specific organisations mentioned in the article, it is important to clarify that bad actors don’t register accounts under the names of their criminal enterprises,” it said.

Israel’s defence ministry, which is responsible for the NBCTF, did not respond to requests for comment.

Under Israeli law, the country’s defence minister can order the seizure and confiscation of assets that the ministry deems related to terrorism.

Regulators globally have long called for tighter controls on crypto exchanges to prevent illegal activities, from money laundering to the financing of terrorism. The seizures by Israel’s NBCTF highlight how governments are targeting crypto companies in their efforts to prevent illegal activity.

Checks users

Binance, founded in 2017 by CEO Changpeng Zhao, says on its website it reviews information requests from governments and law enforcement agencies case by case, disclosing information as legally required.

Binance has also said it checks users for connections to terrorism and has “continued to invest tremendous resources to enhance its compliance programme”, it told US senators in March in response to their requests for information on Binance’s regulatory compliance and finances.

The exchange’s policies and processes comply with EU anti-money-laundering and counterterrorism financing requirements, Binance said in its blog on Thursday.

IS emerged in Syria after Iraq’s civil war. At its 2014 peak, it controlled a third of Iraq and Syria, before being beaten back. Now forced underground, IS militants continue to wage insurgent attacks. The US Treasury said in a report last year that IS had received crypto donations it later converted to cash, accessing funds via crypto-trading platforms. The Treasury did not specify which platforms and declined to comment for this article.

The owner of the two IS-linked Binance accounts seized by Israel was a 28-year old Palestinian called Osama Abuobayda, the NBCTF document shows. Abuobayda did not respond to requests for comment via email addresses and a phone number listed in the NBCTF document.

In a series of investigations last year, Reuters reported that Binance intentionally kept weak anti-money-laundering controls. Since 2017, Binance has processed more than $10bn in payments for criminals and companies seeking to evade US sanctions, Reuters reported. Binance disputed the articles, calling the illicit-fund calculations inaccurate and the descriptions of its compliance controls “outdated”.

Shared information

Two men suspected by Germany of assisting an Islamist gunman who killed four people in Vienna in 2020 used Binance, a letter from German police to the company said. IS later claimed responsibility for the attack.

Binance shared information with the police on the clients, its legal representatives said last year. Reuters could not independently establish this.

Nearly all of the 189 Binance accounts seized by Israel since December 2021 were owned by three Palestinian currency exchange firms, the NBCTF documents show.

The three are designated by Israel as “terrorist organisations”, according to a list on the NBCTF’s website, for their alleged involvement in the transfer of funds by Hamas, which runs the Palestinian territory of Gaza.

Last month, the NBCTF said in a document it had seized crypto worth more than 500,000 shekels ($137,870) from more than 80 Binance accounts belonging to the three Gaza-based companies, Al Mutahadun For Exchange, Dubai Company for Exchange and Al Wefaq Co For Exchange.

The accounts were the property of “terrorist organisations” or used for a “severe terror crime”, the document reads, without elaborating. Local media outlets in Israel previously reported the April seizures.

A person with direct knowledge of Al Mutahadun said it does not work “at all” with crypto or co-operate with Hamas. “We are a money exchange company. Israeli allegations are all lies and are foundless,” the person said.

Al Mutahadun was designated as a “terrorist organisation” in May 2021 by Israel, the NBCTF list shows.

Al Wefaq and Dubai Company did not respond to requests for comment via email and WhatsApp.

Binance did not respond to questions on the accounts owned by the three currency exchange companies.

Economic war

In its blog post, Binance said it works with law enforcement and “leverages information that is only available to them to identify individuals operating accounts for illicit organisations”.

Hamas does not have any connection with the money exchange companies, spokesperson Hazem Qassem said. The allegations of links to the companies are an attempt by Israel to “justify its economic war against Gaza and its people”, Qassem said.

Hamas’ armed wing said last week it would stop receiving funds in bitcoin after an increase in “hostile” activity against donors.

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

Zhao has called the charges an “incomplete recitation of the facts”.

In its complaint, the CFTC said Lim received information in 2019 on Hamas’ transactions at Binance. Lim told a colleague that “terrorists” usually send small sums of funds, as “large sums constitute money laundering”, according to the CFTC complaint.

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

Reuters