Anti-Money Laundering (AML) , Blockchain & Cryptocurrency , Cryptocurrency Fraud

Israel Tracks, Seizes Cryptocurrency From Hamas-Linked Firm

Experts: Seizure Reinforces that Cryptocurrency is Not Anonymous
Israel Tracks, Seizes Cryptocurrency From Hamas-Linked Firm

The Israeli Ministry of Defense has seized 2.6 million shekels - or $836,168, according to exchange rates at the time - worth of cryptocurrency from a currency exchange firm with ties to the Hamas terrorist group, according to Hebrew daily Israel Hayom.

See Also: Better Defense Against Identity Theft and Application Fraud

The exposure of the terror-financing network was a joint effort by the Israel Defense Forces Intelligence, the cybercrime department of the Israel Police and the cyber unit in the state attorney's office, the newspaper reports.

The Israeli Ministry of Defense did not immediately respond to Information Security Media Group's request for confirmation of the report and additional details.

'Blockchain Never Forgets'

The use of cryptocurrency by cybercriminals may be advantageous to law enforcement agencies, according to some experts.

Law enforcement agencies in both the U.S. and Israel have dedicated resources to track online fundraising activity of Hamas and other terrorist organizations, including public-private relationships with blockchain forensic firms, according to William Callahan, director of government and strategic affairs for Blockchain Intelligence Group.

His company develops blockchain technology search, risk-scoring and data analytics solutions for the law enforcement, regulator and financial communities.

This seizure, he tells ISMG, reinforces the notion that "cryptocurrency is not anonymous and can be traced using data from the blockchain."

"It is not only the seizure of the funds that is important. Using analytical tools, investigators will be able to track and trace the funds to the original sender. If you make a transfer of bitcoin or another cryptocurrency, chances are investigators will be able to track the flow of funds to the original sender," says Callahan, a retired special agent who oversaw the federal narcotic enforcement operations for the U.S. Drug Enforcement Administration.

Hamas, he says, operates a network of currency exchanges that allow goods and funds to be imported to fund its terrorist activities - similar to money laundering tactics used by drug cartels.

"Using traditional anti-money laundering data, along with crypto data, law enforcement can identify the source of the funds, and make future arrests and seizures. As we like to remind people - the blockchain never forgets," says Callahan.

Omri Segev Moyal, co-founder of cybersecurity firm Profero, which helps with cryptocurrency crime resolution, says that terrorist organizations and ransomware groups will find it increasingly difficult to use cryptocurrency for illicit activity.

"The current seizure is another great example of how bad actors misunderstand [that] bitcoin - and other cryptocurrencies - can be used for money laundering. As time passes and cryptocurrency becomes more mainstream, this will be like any typical bank account seizure," Moyal tells ISMG.

Crypto Is Not the Problem

According to Callahan, cryptocurrency is not the problem. "The problem is terrorist organizations such as Hamas and noncompliant money exchange businesses that provide services to criminal and terrorist organizations," he says.

"Cryptocurrency has value, and these criminal and terrorist organizations use value - whether it’s in crypto, fiat or commercial goods - to fund their illicit activity. Law enforcement and the private sector are working together to identify and dismantle these networks by using technology to seize funds and arrest violators," he says.

Earlier in July, in a similar move, the Ministry of Defense confiscated about 150 digital wallets containing cryptocurrencies, allegedly used for laundering funds, according to an Al Jazeera report.

About the Author

Prajeet Nair

Prajeet Nair

Assistant Editor, Global News Desk, ISMG

Nair previously worked at TechCircle, IDG, Times Group and other publications, where he reported on developments in enterprise technology, digital transformation and other issues.

Around the Network

Our website uses cookies. Cookies enable us to provide the best experience possible and help us understand how visitors use our website. By browsing, you agree to our use of cookies.