Israel's National Bureau for Counter Terror Financing
(NBCTF) on January 12 confiscated two Binance accounts and their contents, one
of the documents on the NBCTF's website showed. The seizure was to "thwart
the activity" of Islamic State and "impair its ability to further its
goals," the NBCTF said on its website.
The NBCTF document, which has not been previously reported,
did not give any details on the value of the crypto seized, nor how the
accounts were connected to Islamic State.
Binance, the world's largest crypto exchange by trading
volumes, did not respond to Reuters' calls and emails seeking comment.
Israel's defence ministry, which is responsible for the
NBCTF, did not immediately respond to a Reuters request for comment.
Under Israeli law, the country's defence minister can order
the seizure and confiscation of assets that the ministry deems related to
terrorism.
Regulators globally have long called for tighter controls on
crypto exchanges to prevent illegal activities, from money laundering to the
financing of terrorism. The seizures by Israel's NBCTF highlight how
governments are targeting crypto companies in their efforts to prevent illegal
activity.
Binance, founded in 2017 by CEO Changpeng Zhao, says on its
website it reviews information requests from governments and law enforcement
agencies on a case-by-case basis, disclosing information as legally required.
Binance has also said it checks users for connections to
terrorism and has "continued to invest tremendous resources to enhance its
compliance program," it told US senators in March in response to their
requests for information on Binance's regulatory compliance and finances.
Militant group
Islamic State emerged in Syria after Iraq's civil war. At
its 2014 peak, it controlled a third of Iraq and Syria, before being beaten
back. Now forced underground, Islamic State militants continue to wage
insurgent attacks.
The US Treasury said in a report last year that Islamic
State had received crypto donations it later converted to cash, accessing funds
via crypto trading platforms. The Treasury did not specify which platforms and
declined to comment for this article.
The owner of the two Islamic State-linked Binance accounts
seized by Israel was a 28-year old Palestinian called Osama Abuobayda, the NBCTF
document shows. Abuoyada did not respond to requests for comment via email
addresses and a phone number listed in the NBCTF document.
In a series of investigations last year, Reuters reported
that Binance intentionally kept weak anti-money laundering controls. Since
2017, Binance has processed over $10 billion in payments for criminals and
companies seeking to evade US sanctions, Reuters reported. Binance disputed the
articles, calling the illicit-fund calculations inaccurate and the descriptions
of its compliance controls "outdated."
Two men suspected by Germany of assisting an Islamist gunman
who killed four people in Vienna in 2020 used Binance, a letter from German
police to the company said. Islamic State later claimed responsibility for the
attack.
Binance shared information with the police on the clients,
its legal representatives said last year. Reuters could not independently
establish this.
Money exchangers
Nearly all of the 189 Binance accounts seized by Israel
since December 2021 were owned by three Palestinian currency exchange firms,
the NBCTF documents showed.
The three are designated by Israel as "terrorist
organizations," according to a list on the NBCTF's website, for their
alleged involvement in the transfer of funds by Hamas, which runs the
Palestinian territory of Gaza.
Last month, the NBCTF said in a document it had seized
crypto worth over ILS 500,000 from over 80 Binance accounts belonging to the
three Gaza-based companies, Al Mutahadun For Exchange, Dubai Company for
Exchange and Al Wefaq Co. For Exchange.
The accounts were the property of "terrorist
organizations" or used for a "severe terror crime," the document
said, without elaborating. Local media outlets in Israel previously reported
the April seizures.
A person with direct knowledge of Al Mutahadun said it did
not work "at all" with crypto or cooperate with Hamas. "We are a
money exchange company. Israeli allegations are all lies and are
foundless," the person said.
Al Mutahadun was designated as a "terrorist
organisation" in May 2021 by Israel, the NBCTF list shows.
Al Wefaq and Dubai Co did not respond to Reuters' requests
for comment via email and WhatsApp.
Binance did not respond to Reuters' questions on the
accounts owned by the three currency exchange companies.
Hamas does not have any connection with the money exchange
companies, spokesperson Hazem Qassem said. The allegations of links to the
companies were an attempt by Israel to "justify its economic war against
Gaza and its people," Qassem said.
Hamas's armed wing said last week it would stop receiving
funds in bitcoin after an increase in "hostile" activity against
donors.
Binance, its CEO Zhao and its former compliance chief Samuel
Lim are facing civil charges from the US Commodity Futures Trading Commission
(CFTC) for "wilful evasion" of US commodities laws.
Zhao has called the charges an "incomplete recitation
of the facts."
In its complaint, the CFTC said Lim received information in
2019 on Hamas' transactions at Binance. Lim told a colleague that
"terrorists" usually send small sums of funds, as "large sums
constitute money laundering," according to the CFTC complaint.
Lim has not publicly responded to the charges. He did not
respond to messages sent via Telegram seeking comment for this article. ©
Reuters
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