How Israel managed to seize Hezbollah cryptocurrencies
Israel was able to confiscate millions of dollars in Hezbollah cryptocurrencies, which authorities say were used to finance terrorism. How was the confiscation of the digital systems even possible?
Israeli Authorities Seize $1.7M in Crypto
Israel managed to seize $1.7 million worth of Hezbollah cryptocurrencies, Israel’s National Agency for Countering Terrorist Financing (NBCTF) recently reported.
It is not the first time that Israel has successfully seized funds from organizations classified as terrorist in the country. Hamas funds have been confiscated in the past.
Both Hamas and Hezbollah are in constant conflict with Israel. While Hamas is active in Palestine, Hezbollah operates from Lebanon. But how did Israel manage to confiscate cryptocurrencies? Both organizations are increasingly using the self-custody digital currencies to make it more difficult for the authorities to monitor and confiscate them.
According to a report by NBCTF, the cryptocurrencies were accessed with the help of blockchain forensic scientists from the US company Chainalysis. The company is a leader in exploiting blockchain data. Chainalysis systems are integrated into many centralized crypto exchanges and work there automatically.
Chainalysis explains in a blog post that Hezbollah is said to have obtained the funds from Iran. The Iranian Quds Brigade acts as a financier. It is a unit of the Iranian Armed Forces that is specifically responsible for foreign activities.
How Israel managed to seize Hezbollah cryptocurrencies
Israel succeeded in seizing Hezbollah’s cryptocurrencies largely because the funds are sent to centralized crypto exchanges. Syrian intermediaries are used to disguise the origin and ultimate goal of the funding.
These have accounts on crypto exchanges where they are registered with their real name. A public announcement by Binance shows that the world’s leading crypto exchange is also being used. Other trading platforms are also part of the repertoire, but do not appear by name in the reports.
“We have been officially recognized by Israel’s National Bureau for Counterterrorism Finance (NBCTF) and Israel’s National Cybercrime Unit for our contribution to global security,” Binance wrote on Twitter shortly after the successful action.
The Israeli authority was able to identify twelve people who participated in the movement of funds with an account on Binance or another crypto exchange. It was shipped in chunks ranging from tens to four digits in US dollars.
According to research, the original deposit of the funds should take place in Iran. The lenders should use so-called hawala banking. It is a system for sending funds that is triggered by depositing cash. A partner of the original payee then transfers a predetermined amount to a third party.
The money thus ends up in Syria and is deposited by the Syrian middlemen on crypto exchanges. Hawala is widespread in the Orient and is hardly traceable due to the use of cash.
The fact that the funds end up in crypto networks at all and are sent in this way is on the one hand due to their ease. On the other hand, crypto exchanges are used to ultimately recover cash.
Use of Tether becomes fatal
In addition to using these monitored trading platforms, which often use the Chainalysis Reactor program , Hezbollah’s use of Tether (USDT) on the Tron network has also become its undoing.
Even non-custodial blockchain addresses on the Tron network can be subject to seizure if they have tether. The company of the same name, Tether, was able to freeze four addresses.
The background to this is the special powers that Tether has as the publisher of the TRC-20 tokens. This would not have been possible with another cryptocurrency like Bitcoin .
In total, the Israeli authorities classified 39 blockchain addresses as terrorist as part of the operation. They all belong to the Tron network. The main target of the intervention is the Syrian citizen Tawfiq Al-Law.
Israeli Defense Minister Yoav Gallant announced further measures against terrorist financing.
