Israel’s National Counter-Terrorism Bureau (NBCTF) has seized $1.7 million in cryptocurrencies from accounts believed to belong to Hezbollah and Iran’s Quds Force. This was shared by Israel’s Defense Minister Yoav Gallant on June 28 with. Gallant spoke of a great success. Israel and some other countries, including Germany and the USA, classify the groups as terrorist organizations. In addition to the Israeli secret service, the blockchain forensic experts from Chainalysis and various crypto exchanges also took part in the measures.
According to consistent reports, Israel’s military operation in Jenin in the West Bank has ended. The two-day mission is considered the largest military operation of its kind in 20 years. In response to the operation, according to the Israeli military, five rockets were fired into Israeli territory on the night of July 5, but these were intercepted. As a result, Israel launched air strikes on targets in the Gaza Strip. One Israeli soldier died in the operation. On the other side, at least twelve Palestinians were killed and more than 100 injured.
Blockchain trails lead to Iran and Syria
According to Chainalysis since its inception, Hezbollah has received much of its funding from Iran from Iran’s Quds Brigade, the Islamic Revolutionary Guard Corps (IRGC). The transactions are often processed through Syrian middlemen, sometimes also in cryptocurrencies. The remittances follow a “pattern in which funds are first moved from financial intermediaries to hawala services and OTC brokers and then to Hezbollah-controlled addresses on mainstream exchanges,” the US company’s forensic experts say.
NBCTF focused the seizure on wallets controlled by Tawfiq Muhammad Said Al-Law. A Syria-based hawala operator said to work with senior Hezbollah members Muhammad Qasim Al-Bazzal and Muhammad Ja’far Qasir. Hawala is an international payment system that can be used to anonymously process cash transactions involving middlemen. Both Al-Bazzal and Ja’far Qasir are on the OFAC sanctions list.
All of the funds seized by NBCTF in the action were “in USDT on the TRON network (USDT-TRON),” according to Chainalysis.
Chainalysis: “Crypto finance terrorism isn’t worth it”
Chainalysis’ Reactor software was used in the investigation. The program helps to identify and display wallet connections and payment flows. “We can see here funds moving first from financial intermediaries to an Al-Law-controlled wallet and then to a Hezbollah-controlled deposit address on a mainstream exchange,” the US firm’s analysis reads. The affected address is also said to be involved in transactions with Iranian stock exchanges.
Overall, however, cryptocurrencies are only a small part of the group’s funding, Noy Moshe, Terrorist Financing Expert at Chainalysis, told BTC-ECHO.
Most major blockchains are publicly viewable. Therefore, payments can also be tracked comparatively well. “A common misconception about cryptocurrencies is that they are completely anonymous and untraceable, when the opposite is true. Cryptocurrencies offer unprecedented transparency,” Moshe points out to BTC-ECHO.
The success of the investigations mean that individual terrorist organizations such as Hamas have stopped their Bitcoin donation program.
Crypto exchanges of central importance
The cooperation of the private sector is particularly important in identifying actors involved in criminal activities. Cooperation with crypto exchanges in particular helps with the investigation. For example, Binance secured Twitter support to the Israeli authorities. According to one report of the Fortunes news portal, NBCTF boss Paul Landes said that other stock exchanges were also said to have been involved, but wanted to remain anonymous.
The exchanges play an important role as the interface between the crypto and fiat worlds. Anyone who opens an account with a large central crypto exchange usually has to go through a KYC process for user identification. Due to the transparency of many blockchains and the high willingness of the private sector to cooperate, cryptocurrencies in many cases only offer a low level of anonymity.