The Israeli government said Tuesday that it seized millions of dollars in cryptocurrency from accounts that had sent or received funds in alleged financing schemes for a powerful arm of the Iranian military and the Iran-backed Hezbollah militant group in Lebanon.
Israeli Defense Minister Yoav Gallant said he issued an order to seize the cryptocurrency wallets and turn over the funds to the Israeli government.
He described the “extensive” operation as Israel’s first to target the Hezbollah militant group and the Iranian paramilitary Revolutionary Guard’s elite Quds Force — two organizations sworn to Israel’s destruction. Both have been designated by the United States and some other governments as terrorist organizations and locked out of the traditional global financial system.
It was a multi-agency effort, Gallant said, involving Israel’s Mossad spy agency, the Israeli military intelligence office, the Israeli police and others.
Israel has previously seized cryptocurrency belonging to the paramilitary arm of Gaza’s Hamas rulers as part of counterterrorism financing investigations.
“This is the first incident of this magnitude,” Gallant said, noting that the effort took place earlier this week. “We have effectively cut off the flow of terror funds via this channel.”
Iran’s mission to the United Nations did not immediately respond to a request for comment on Israel’s announcement.
Gallant alleged that Hezbollah and the Quds Force rely on virtual currency to finance their militant activities. Cryptocurrencies such as Bitcoin are favored for illicit transactions because they are perceived as hard to trace. Anyone in the world can create a Bitcoin account and begin receiving digital funds without providing a name or address.
Countries facing American sanctions, like Israel’s regional foe Iran, have worked toward creating their own cryptocurrencies to circumvent financial restrictions.
Gallant said that Israel’s seizure of the illicit funds should serve as a warning to “whoever finances terror,” as Israeli authorities have developed tools and techniques that can identify those involved in so-called blockchain transactions.
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