Following the recent escalation of hostilities between Palestinian terrorist group, Hamas and Israel, crypto exchange Binance has frozen accounts linked to Hamas militants as per requests from Israeli law enforcement.
Hamas launched an attack on Israel last Saturday. The attack has been described as evil from many quarters and according to a report by the Wall Street Journal, Hamas’ attack was financed with crypto.
But now amid the escalation of hostilities, the Israeli police were able to freeze and seize accounts that were supposedly linked to Hamas on Binance, per local media reports on Tuesday.
Those reports say Israeli police froze crypto accounts used by Hamas to collect donations and funds from sympathisers on social media. The cyber arm of Israel Police’s Lahav 433 unit worked with the country’s defence ministry, intelligence agencies, and Binance to identify and freeze the accounts being used to finance Hamas’ terror.
Recall that in 2019, Reuters reported that Hamas initiated a fundraising campaign on social networks to urge the public to deposit crypto into their accounts. The terror group reportedly received large amounts of funds through digital currencies during the last year.
According to a WeChat post by Binance’s co-founder, Yi He, the freeze is targeted toward Hamas and not the people of Palestine.
The Binance chief stated that:
“Hamas is a designated terrorist organization by the United Nations. Therefore, any organization, including banks and trading platforms, will need to cooperate on the receipt of freeze requests. This is not something Binance can decide on its own.”
Yi He further explained that no trading platforms can refuse such requests:
“Palestine has an organized government. Hamas is a local militant group. They kill civilians; that’s the problem. Hamas is not Palestine; the freeze is targeted towards Hamas, not Palestine.”
Terrorism financing and the use of digital assets for illicit purposes are to be condemned in all circumstances. However, this freezing of Binance accounts is another development that showcases how the blockchain system, as we have come to know it, might not be as big on decentralization as it claims.
Hamas-Binance incident demystifies crypto decentralisation
The conflict between Hamas and Israel raises important questions about the extent to which the cryptocurrency ecosystem adheres to the principles of decentralization it so vehemently champions.
At the core of the issue is the idea that cryptocurrencies were designed to be decentralized, free from the control of any central authority. The very creation of Bitcoin was, in part, a response to the 2008 financial crisis, which exposed the fragility of the traditional banking system. Satoshi Nakamoto’s vision was to create a digital currency that would bypass banks and governments, empowering individuals with financial sovereignty.
However, recent developments from centralized exchanges have cast a shadow on those principles. Most centralized exchanges maintain a level of control that blurs the line between traditional financial institutions and the crypto world.
The power to freeze accounts and conduct investigations into user activity is a central authority that many users may not be aware of. It becomes apparent that these platforms can exert influence over users’ funds, effectively acting as gatekeepers in the digital financial landscape.
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One of the reasons why centralized exchanges continue to be a popular choice for users is their convenience of usage compared to DeFi platforms which are usually complicated. Also, centralized exchanges often operate within the legal frameworks of the countries in which they are based. This can provide a sense of security for users.
But the fact still remains that: Not Your Keys: Not Your Coins. This is exemplified by the FTX crash and other crypto exchanges that have folded up all over the years.
Ultimately, the Binance-Hamas incident is a stark reminder that, in certain situations, centralized exchanges can and will exercise control over users’ assets. While this may be seen as a necessary step for regulatory compliance, it calls into question the very essence of decentralization in the crypto world.
As the crypto space continues to evolve, it is essential to question the balance between security, regulation, and true decentralization. Only then can we move towards a future where individuals have full control over their financial assets, as originally envisioned by the creators of Bitcoin.
Disclaimer: This article should not be in any way misinterpreted as a means of promoting or endorsing terrorism and other illicit activities. All views are from a subjective standpoint, based upon facts rather than sentiments, and at its core is an argument about the decentralised nature of crypto.
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