Exclusive: Israel seized Binance crypto accounts to ‘thwart’ Islamic State, document says

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LONDON, May 4 (Reuters) – Israel has seized around 190 crypto accounts on crypto exchange Binance since 2021, including two believed to be linked to Islamic State and dozens more believed to belong to Palestinian companies linked to the Islamist group Hamas, according to documents released by the country’s counterterrorism authorities show.

On January 12, Israel’s National Counterterrorism Financing Bureau (NBCTF) confiscated two Binance accounts and their contents, one of the documents on the NBCTF website showed. The seizure was aimed at “thwarting the activity” of the Islamic State and “hindering its ability to pursue its objectives”, the NBCTF said on its website.

The previously unreported NBCTF document gave no details on the value of the seized crypto, or how the accounts were connected to the Islamic State.

Binance, the world’s largest crypto exchange by trading volumes, did not respond to calls and emails from 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 country’s defense minister can order the seizure and confiscation of assets the ministry deems related to terrorism.

Regulators around the world have long called for tighter controls on crypto exchanges to prevent illegal activities, from money laundering to terrorist financing. Seizures made by Israel’s NBCTF show how governments target crypto companies in their efforts to prevent illegal activity.

Binance, founded in 2017 by CEO Changpeng Zhao, states on its website that it reviews government and law enforcement requests for information on a case-by-case basis, disclosing information as required by law.

Binance also said it checks users for ties to terrorism and has “continued to invest enormous resources to improve its compliance program,” it told U.S. senators in March in response to their requests for clarification. regulatory compliance and financial information from Binance.

ACTIVIST GROUP

The Islamic State appeared in Syria after the civil war in Iraq. At its height in 2014, it controlled a third of Iraq and Syria, before being pushed back. Now forced underground, Islamic State militants continue to carry out insurgent attacks.

The US Treasury said in a report last year that the Islamic State received crypto donations which it then converted into cash, accessing funds through crypto trading platforms. The Treasury did not specify which platforms and declined to comment for this article.

The owner of the two Binance accounts linked to the Islamic State seized by Israel was a 28-year-old Palestinian man named Osama Abuobayda, according to the NBCTF document. Abuoyada 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 anti-money laundering controls weak. Since 2017, Binance has processed more than $10 billion in payments for criminals and companies seeking to evade US sanctions, Reuters reported. Binance took issue with the articles, calling the calculations of illicit funds inaccurate and the descriptions of its compliance checks “outdated”.

Two men suspected by Germany of aiding an Islamist gunman who killed four people in Vienna in 2020 used Binance, according to a German police letter to the company. The Islamic State later claimed responsibility for the attack.

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

MONEY EXCHANGERS

Almost all of the 189 Binance accounts seized by Israel since December 2021 belonged to three Palestinian exchange firms, according to NBCTF documents.

The three are designated by Israel as “terrorist organizations”, according to a listing on the NBCTF 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 that 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 owned by “terrorist organizations” or used for a “serious terrorist crime”, the document said, without giving further details. Local media in Israel had previously reported the April seizures.

A person with direct knowledge of Al Mutahadun said it does “not work at all” with crypto or cooperate with Hamas. “We are a currency exchange company. The Israeli allegations are all lies and are baseless,” the person said.

Al Mutahadun was designated as a “terrorist organization” in May 2021 by Israel, according to the NBCTF list.

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

Binance did not respond to questions from Reuters about the accounts held by the three exchange firms.

Hamas has no ties to currency exchange companies, spokesman Hazem Qassem said. The allegations of corporate ties were an attempt by Israel to “justify its economic war against Gaza and its people”, Qassem said.

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

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

Zhao called the charges an “incomplete account of the facts”.

In its complaint, the CFTC said Lim received information in 2019 about Hamas’ transactions at Binance. Lim told a 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 requesting comment for this article.

($1 = NIS 3.6266)

Reporting by Tom Wilson and Angus Berwick in London; additional reporting by Nidal al-Mughrabi in Gaza. Editing by Elisa Martinuzzi and Jane Merriman

Our standards: The Thomson Reuters Trust Principles.

Thomas Wilson

Thomson Reuters

Tom covers crypto companies, regulation and the London markets, focusing through 2022 on crypto exchange Binance. He has worked at Reuters since 2014, with a previous assignment in Tokyo where he uncovered abuses in Japan’s immigration system and won a joint Overseas Press Club award for his reporting on tobacco giant Philip Morris.

Angus Berwick

Thomson Reuters

Award-winning investigative journalist based in London, specializing in financial business journalism. He was previously a correspondent in Spain and Venezuela, where he reported on the Maduro government’s efforts to retain power. He was Reuters Journalist of the Year in 2019 and won two Overseas Press Club awards.

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