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Al-Monitor – Israel announced a major cryptocurrency seizure from Iran’s Islamic Revolutionary Guard Corps (IRGC) and Hezbollah on Tuesday, a potentially significant development in how states and armed groups use virtual assets.
Israeli Defense Minister Yoav Gallant said on Tuesday that Israel seized a few days ago millions of dollars in cryptocurrency from digital wallets used by the IRGC’s Quds Force and its Lebanese ally. Gallant issued the order to seize the relevant cryptocurrency wallets and turn the funds over to the Israeli government. Israel’s spy agency Mossad, Israeli military intelligence and Israeli police were involved in the operation, according to The Associated Press.
Gallant said at a conference held by the Defense Ministry’s National Bureau for Counter Terror Financing that the funds were being used for “terrorism” and the seizure constitutes the first of its kind for Israel.
“A few days ago, an extensive and precedent-setting operation — to expose a route for financing terror with digital currencies — was wrapped up. This is the first incident of this magnitude in which an infrastructure led by Hezbollah and the Iranian Quds Force that transferred millions of dollars to be used by terror elements was thwarted,” he said, according to The Times of Israel.
The Iranian government did not immediately respond to the news, nor did Hezbollah.
Why it matters: The revelation demonstrates the continued importance of cryptocurrency to regional actors and Israel’s actions to counter cryptocurrency usage by its enemies. In May, Reuters reported that Israel had seized nearly 200 accounts on the crypto platform Binance since 2021, including two accounts linked to the Islamic State and others linked to Palestinian entities connected to Hamas.
The Iranian government has expressed an interest in using cryptocurrency before. In August of last year, the IRGC-affiliated Tasnim News Agency reported that Iran made an import order using cryptocurrency for the first time.
Iran and its allies are subject to Western sanctions and prohibited from using much of the global financial system. This includes a prohibition on Iran from using the international financial messaging system SWIFT that is used for bank transfers. Cryptocurrency is thus appealing to them and other designated entities since it is relatively accessible and harder to trace.
Cryptocurrency is receiving more scrutiny from governments recently, however. For example, the US Securities and Exchange Commission announced this month that it is suing the popular crypto platform Coinbase for allegedly operating as an unregistered securities exchange.
Israeli authorities are also seeking to more stringently regulate cryptocurrency in Israel.
Hamas notably announced in April that it would stop using the popular cryptocurrency Bitcoin for funding. The Palestinian armed group cited increased efforts to prevent its people from using the currency, according to Reuters.
Know more: The US crackdown on cryptocurrency could make the Gulf more attractive to cryptocurrency platforms, Sam Wendel wrote in a memo for Al-Monitor PRO this month.
