Allegations surfaced on August 26 regarding binance, a leading cryptocurrency exchange, freezing Palestinian users' crypto assets following a request from Israeli authorities. These accusations, highlighted by Ray Youssef, the co-founder of Paxful and CEO of Noones P2P platform, have raised questions about the independence of cryptocurrency exchanges and user privacy.
The Accusation and the Israeli Anti-Terrorism Law
Youssef, through X, claimed that binance had seized funds from all Palestinians at the behest of the Israel Defense Forces (IDF). He stated that the exchange did not return the funds and rejected appeals from affected users. At present, neither binance nor Israeli authorities have publicly addressed these allegations.
The core of the issue revolves around the contention that cryptocurrency wallets, including those owned by Palestinians, received funds from an organization labeled as a terrorist entity by Israel – the Dubai Exchange Company. This organization based in Gaza was flagged by Israeli authorities in 2022.
binance reportedly cited a November 2023 letter signed by Paul Landes of Israel's National Bureau for Counter-Terror Financing when responding to appeals from Palestinian users. The letter justified the temporary seizure of property belonging to a declared terrorist organization, including cryptocurrency funds, under anti-terrorism laws.
"We Are All Palestinians Now": Youssef's Concerns About crypto Seizures
Youssef expressed concerns that centralized exchanges like binance are morphing into informants for governments rather than secure platforms for storing digital assets. He alleged that binance divulged information on users in the Middle East and North Africa (MENA) region to the IDF without due process, which would severely damage user trust if proven true.
Youssef's cautionary statement, "Not your keys, not your coins. We are all Palestinians now," underscores the growing worries about power centralization within major exchanges and the potential for governmental interference in what many believed to be a decentralized and autonomous system.
This incident is indicative of a broader trend of cryptocurrency seizures tied to geopolitical conflicts. In October 2023, Israeli authorities froze cryptocurrency accounts linked to Hamas allegedly used for fundraising. Reports suggest that binance aided in closing these Hamas-associated accounts.
Israeli authorities also confiscated 190 binance accounts supposedly connected to Hamas and ISIS in April 2023. Tether, a major stablecoin issuer, froze 32 crypto addresses believed to be linked to terrorist activities in Israel and Ukraine in 2023 in collaboration with Israel’s National Bureau for Counter-Terror Financing, resulting in the seizure of $873,118 worth of USDT.
