Israel Targets Hamas Connected Crypto Wallets

Key Insights:

• Israeli authorities seize crypto wallets linked to the terrorist group Hamas.
• Several leading crypto exchanges have rejected the Ukrainian government’s call to freeze Russian accounts.
• Other governments will be looking to follow a similar route to prevent Russia from evading sanctions.

Regulatory and government scrutiny has been on the rise in recent months. Illicit activity across the digital asset footprint has driven greater regulatory interest in cryptos and NFTs in particular.

Hamas Crypto Wallets Seized

Overnight, the Défense Ministry of Israel seized 30 crypto wallets. According to the Times of Israel, the crypto wallets were allegedly used to fund Hamas.

An exchange company called al Mutahadun owned 12 accounts. Israeli authorities linked the accounts to the 30 wallets. Al Mutahadun “assists the Hamas terror group, and especially its military wing, by transferring funds amounting to tens of millions of dollars a year.”

The Shamlah family own Al Mutahadun. According to the news, Israeli authorities have targeted the family on previous occasions.

In July 2021, Israel reportedly uncovered a web of Hamas-linked electronic wallets. Hamas used the wallets to access funds by using Bitcoin (BTC) and altcoins. Israeli authorities stated that Hamas is actively raising funds for its military wing, favoring cryptos to fund illicit activity.

Earlier this year, news hit the wires of Delhi police capturing a group that stole crypto from a businessman in India. The group reportedly transferred the funds to wallets of Al-Qassam Brigades, the military group of Hamas.

Israel Raises the Bar on Fight Against Illicit Crypto Activity

The timing of Israel’s seizure coincides with calls from the Ukrainian government for crypto exchanges to impose a blanket ban on all Russian accounts.

With exchanges including Coinbase, Binance, and Kraken rejecting the request of the Ukrainian government, identifying politically linked accounts will be the next step in preventing Russia from circumventing sanctions.

Russia is no stranger to illicit activity and cryptos. Earlier this month, we reported ransomware figures for 2020 and 2021. Again, Russian entities were the most active in gaining funds by illegal means.

Governments will need to trace politically connected crypto accounts and wallets to freeze accounts and block funds from reaching the Russian government.

Last week, ECB President Lagarde called for EU lawmakers to expedite the implementation of Markets in Crypto Assets (MiCA). Lagarde further discussed Russia evading sanctions via crypto, stating that the ECB would pursue and properly deal with any criminal activity.