The Israeli Defense Ministry reported that the Israeli government has seized millions of dollars in digital funds belonging to two Iranian-backed groups: the Iranian military and the Hezbollah militant group. This ploy pulled by the Israeli intelligence agencies is targeted at rattling the funding networks of these Iranian proxies famous for using cryptocurrencies to channel illegal operations.

These Iranian-backed groups have been prohibited from participating in the established international banking system because they have been classified as terrorist organizations by the United States and certain other states. This is the first time any agency has taken bitcoin from Hezbollah and Iran’s Quds Force, according to reports from Chainalysis.

Israeli government seizes millions in diverse cryptocurrencies

The Israeli authorities have successfully found and apprehended an estimated $1.7 million in cryptocurrencies through their collaboration with other agencies in the nation. All money were in USDT on the TRON network (USDT-TRON), and the confiscation list included more than 40 addresses.

The way the assets were initially transferred from financial facilitators to hawala providers and OTC brokers, and then to Hezbollah-controlled addresses at significant exchanges, is highly unique. The seizure, according to the report from the official communiqué, happened after Defense Minister Yoav Gallant gave the order a few weeks ago. Deeply involved were the police, the Mossad spy agency, the military intelligence office of Israel, and others.

According to Gallant, “This is the first event of this magnitude in which an infrastructure headed by Hezbollah and the Iranian Quds Force that transferred millions of dollars for use by terrorist elements was thwarted.”

He was adamant about outlining the extent of the confiscation when he spoke at the third crypto conference of the National Bureau for Counter-Terror Financing at the Israeli Ministry of Defense. Israel, on the other hand, has in the past confiscated digital assets belonged to the Hamas movement that governs the Gaza Strip as part of investigations into the financing of terrorism.

Gallant was eager to point out that Hezbollah and the Quds Force had been paying for their deadly operations illegally by using virtual currencies from third parties, and that this was the case. The discovery, according to Gallant, should serve as a message to “whoever finances terror” that Israel has created processes and resources to find those in charge of such activities.

How Cryptocurrency has been used to finance war by terrorist organizations

Although a sizable portion of cryptocurrency investors acknowledge that the cryptocurrency ecosystem’s openness and anonymity are among its most appealing features, many are unaware of how this has drawn other risky people and groups, including terrorist organizations. Earlier last year, Elliptic, a blockchain analytics company, revealed that pro-Ukrainian war initiatives received cryptocurrency donations totaling over $212 million. Included in this is an estimated $80 million in cryptocurrency that is immediately sent to the Ukrainian government.

According to reports, these cryptocurrency funds were used to buy drones, helmets, demining gear, and bulletproof vests for use in battle. A portion of the cash were also used to purchase radios and medical supplies as support equipment. According to the aforementioned article, the use of cryptocurrencies to finance armed conflict is not a new phenomena.

Just as countries use cryptocurrency for sparring, terrorist organizations have also been using cryptocurrency for illicit operations. This is extremely worrisome, as cryptocurrency stands out as the core of the world’s future of technology. Israel’s successful confiscation of millions of cryptocurrency with the two-backed Iranian groups is one move other anti-terrorist forces and groups will be looking to emulate.