Israel Seizes Millions of Dollars in Crypto Funds Intended for Iranian Proxies

The Israeli government has seized millions of dollars in digital funds from accounts intended for use by two powerful Iranian-backed military groups sworn to Israel’s destruction, the Israeli Defense Ministry announced on Tuesday.

The cryptocurrency funds had been intended for use by Iranian proxy Hizbullah in Lebanon and by the elite paramilitary Quds Force of the Iranian Revolutionary Guard. Both groups have been designated by the United States and some other governments as terrorist organizations and have been locked out of the conventional global financial system.

Israeli Defense Minister Yoav Gallant said he had issued an order to seize the digital funds and turn them over to the Israeli government. He said the operation, Israel’s first targeting Hizbullah and the Quds Force, was “extensive” and involved multiple agencies, including the Mossad spy agency, military intelligence, the Israeli police, and others.

Israel has previously seized digital funds belonging to the Hamas group that rules the Gaza Strip as part of counterterrorism financing investigations.

“This is the first incident of this magnitude,” Gallant said. “We have effectively cut off the flow of terror funds via this channel.”

Gallant said that Hizbullah and the Quds Force illegally used virtual currencies to receive funds from third parties to finance their militant activities and that Israel’s seizure should serve as a warning to “whoever finances terror” that Israel has developed tools and techniques to identify those involved in such transactions.

Cryptocurrencies, such as bitcoin, are favored for illicit transactions because they are perceived as hard to trace. Iran and other countries have worked to create their own cryptocurrencies to circumvent international financial restrictions.