The Israeli Defense Ministry reported that the Israeli government has seized millions of dollars in digital funds belonging to two Iranian-backed groups: the Iranian military and the Hezbollah militant group. This ploy pulled by the Israeli intelligence agencies is targeted at rattling the funding networks of these Iranian proxies famous for using cryptocurrencies to channel illegal operations.
Identified by the United States and some other states as terrorist organizations, these Iranian-backed groups have been restricted from being involved in the conventional global financial system. Based on reports from Chainalysis, this is the first time any agency has seized cryptocurrency from Hezbollah and Iran’s Quds Force.
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Israeli government seizes millions in diverse cryptocurrencies
Through its partnership with other agencies in the country, the Israeli authorities have successfully located and captured an estimated $1.7 million in cryptocurrencies. As reported, more than 40 addresses were on the seizure list, and all funds were in USDT on the TRON network (USDT-TRON).
What is very peculiar about the mode of operation is how the assets were initially transferred from financial facilitators to hawala services and OTC brokers, and then to Hezbollah-controlled addresses at major exchanges. Per the report from the government communiqué, the seizure took place after Defense Minister, Yoav Gallant, approved the move several weeks ago. Israel’s Mossad spy agency, its military intelligence office, the police, and others were deeply involved.
Gallant states, “This is the first event of this magnitude in which an infrastructure headed by Hezbollah and the Iranian Quds Force that transferred millions of dollars for use by terrorist elements was thwarted.”
Speaking at the third crypto conference of the National Bureau for Counter-Terror Financing at the Israeli Ministry of Defense, he was adamant about demonstrating the scope of the seizure. However, as part of investigations into the financing of terrorism, Israel has in the past taken digital assets belonging to the Hamas organization that controls the Gaza Strip.
Gallant was quick to point out that Hezbollah and the Quds Force had been receiving money for their violent actions illegally from third parties through virtual currencies. Gallant contends that the discovery should serve as a warning to “whoever finances terror” that Israel has established methods and capabilities to track out individuals responsible for such dealings.
How Cryptocurrency has been used to finance war by terrorist organizations
Though a good number of crypto investors admit that the anonymity and transparency of the cryptocurrency ecosystem are its core endearing factors, many are oblivious to how this has attracted other dangerous individuals and organizations, especially terrorist organizations. Early this year, Elliptic, a blockchain analytics firm reported that over $212 million worth of crypto was donated to pro-Ukrainian war efforts. This includes an estimated $80 million worth of crypto going directly to the Ukrainian government.
These crypto funds, as reported, were used to acquire war equipment like bulletproof vests, helmets, demining equipment, and drones. A part of the funds was also splashed on support materials like medical supplies and radios. The use of cryptocurrency to fuel war activities is not a recent phenomenon, as seen in the above report.
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Just as countries use cryptocurrency for sparring, terrorist organizations have also been using cryptocurrency for illicit operations. This is extremely worrisome, as cryptocurrency stands out as the core of the world’s future of technology. Israel’s successful confiscation of millions of cryptocurrency with the two-backed Iranian groups is one move other anti-terrorist forces and groups will be looking to emulate.
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