Binance denies requests from the Israeli military to freeze wallets linked to Palestinians with ties to illegal activities

Binance, the world’s largest cryptocurrency exchange, has been resisting recent requests from the Israeli military to freeze cryptocurrency wallets linked to Palestinians and other individuals in the region.

According to Nils Anderson Röed, Binance’s global head of financial crime investigations, the platform has rejected 86% of these requests due to insufficient evidence.

Röed emphasized that Binance conducts its own independent investigations to ensure compliance with international laws, while also protecting the rights of its users. This approach contrasts with claims that Binance blindly follows government directives. Furthermore, Röed noted the company’s commitment to proper due diligence in politically sensitive regions, such as the Middle East.

Binance rejects the majority of requests from the Israeli military

In a recent interview, Röed explained how Binance handles requests from the Israel Defense Forces (IDF). He highlighted that the company does not rely solely on external reports and is capable of conducting its own intelligence research using open sources.

For example, a recent case involved over 1,500 wallet freeze requests from the IDF. However, Binance determined that only 220 wallets (14% of the total) had real links to illicit activities.

Therefore, the remaining wallets remained untouched, ensuring that the company did not mistakenly block legitimate transactions.

In August, accusations surfaced that Binance was confiscating Palestinians’ funds at the request of the IDF. Ray Youssef, co-founder of the Paxful cryptocurrency platform and CEO of Noones P2P, made this claim in a post on X (formerly Twitter):

“Binance seized all funds from all Palestinians following a request from the IDF. They refuse to return the funds. All appeals were denied.”

Youssef also argued that citizens of other countries could face the same fate:

“All Palestinians are affected, and, judging by how things are going, all Lebanese and Syrians will receive the same treatment. Without their keys, without their coins.”

He cited a letter from November 2023, signed by Paul Landes, head of Israel’s National Bureau for Counter Terror Financing, as the source of this accusation. The letter allegedly stated that the Ministry of Defense could order the confiscation of funds presumed to be destined for terrorist organizations.

Balancing compliance and user rights

Röed revealed that Binance’s investigations team works closely with its legal department and consults with security agencies to make well-informed decisions.

For example, the IDF might classify a wallet as being linked to terrorist financing. However, an independent analysis by Binance could show that the same wallet is actually associated with a charity.

These discrepancies are resolved through discussions with legal experts and compliance officers before any action is taken.

Röed, a veteran in the field of cybersecurity with extensive experience at Europol and in the Dutch government, emphasized that Binance allocates extra resources to handle complex cases in volatile regions like the Middle East.

According to Binance’s head of investigations, this process ensures that the company’s actions comply with international legal standards, aiming to prevent Binance from unjustly harming its users by following every request regarding active wallets on the platform.

Ensuring transparent and responsible practices

In August, Binance CEO Richard Teng denied allegations that the company had frozen all Palestinian wallets at the request of the IDF. He clarified that only wallets with clear ties to illicit activities were frozen, demonstrating Binance’s commitment to transparency and fair practices.

Teng emphasized that Binance conducts thorough investigations before taking any action, aiming to balance regulatory compliance with the protection of its users’ rights. This response further underlines the platform’s stance on following international legal standards while maintaining the integrity and trust of its user base.

Additionally, Röed emphasized that maintaining compliance without compromising user rights is a priority for Binance, especially in regions where political and financial issues intersect.

Despite the controversy surrounding the potential use of cryptocurrencies by terrorists in the region, Palestine does not show significantly different data in terms of Binance platform traffic. According to Similar Web, Palestine accounted for around 0.05% of Binance’s traffic in 2023.

However, this traffic might have increased this year due to the rising attacks from Israel and the subsequent destruction of Palestinian infrastructure, including its economic and financial systems.

Israel targets other cryptos beyond Bitcoin

According to Reuters, Israel has been focusing on various cryptocurrency networks as potential means of transferring funds to and from groups considered terrorist organizations in the region, such as Hamas and Hezbollah.

In 2023, amid Israeli attacks on Gaza and other Middle Eastern targets, Reuters reported that the Tron network had overtaken Bitcoin in this regard. Tron was seen as a faster and cheaper option for transferring cryptocurrencies associated with groups designated as terrorist organizations by Israel, the United States, and other countries.

On October 7, 2023, Hamas attacks on Israel killed around 1,200 people. Subsequent Israeli bombings and ground invasions in Gaza have killed more than 40,000 people to date. This has led to increased scrutiny of Hamas’s funding sources.

Middle east tensions influence market instability

The ongoing Israeli-Palestinian conflict has been a source of instability for global financial markets, including the cryptocurrency sector. A significant portion of recent fluctuations in Bitcoin’s price can be attributed to these tensions.

The situation in the region has escalated with the involvement of new actors in the conflict. For instance, following Israeli bombings in Lebanon and the IDF’s ground invasion, Iran responded with missiles that struck various areas in Israel.

Iran’s response last week triggered a drop in Bitcoin’s value, as the market grows increasingly concerned about the possibility of a broader regional war, potentially involving direct confrontation between Iran and the United States.

Although the Democratic administration in the U.S. advocates for a ceasefire, the country continues to provide military support to Israel. This increases the likelihood of escalating tensions, with possible global repercussions. Rising oil prices, increased economic sanctions, and heightened military spending could lead investors to adopt more defensive positions.

Another factor that cannot be ignored is the potential influence of the Middle East conflict on the upcoming U.S. elections in November. Israeli Prime Minister Benjamin Netanyahu is an ally of Republican candidate Donald Trump, and his actions could impact the outcome of the U.S. presidential race.