Does Binance freeze the accounts of ALL Palestinians?

Blick auf Gaza aus einer anderen, besseren Zeit. Bild von Marcin Monko via flickr.com. Lizenz: Creative Commons

There are claims that the large exchange Binance is freezing the accounts of all Palestinians on orders from Israel. The exchange denies this, but the legal situation suggests it’s not so straightforward.

Allegedly, Binance, the world’s largest crypto exchange, has confiscated the funds of “all Palestinians at the request of the Israel Defense Forces (IDF).” This is what Ray Youssef, founder of Paxful and Nooone, writes on Twitter (now X).

Ray posts a photo of the message that is supposedly the basis for the confiscation. The message is in Hebrew. Different translations exist, with one added by ChatGPT, but the content remains somewhat cryptic. Apparently, someone—Binance?—has objected to the seizure of cryptocurrencies. An Israeli anti-terror authority rejected this objection by referencing the Anti-Terrorism Law.

This law allows the Defense Minister to order the confiscation of property if it belongs to an official terrorist organization or is used in connection with terrorism. The order in this case is based on reliable intelligence about cryptocurrency wallets, showing that funds were sent to or from a terrorist organization, the “Dubai Exchange Company in the Gaza Strip.” This organization was declared a terrorist group as early as March 2022. It is one of 189 accounts on Binance that Israel has frozen since 2021.

Ray Youssef now assures that he has received this document from various sources. “ALL Palestinians are affected, and if things continue as they are, all Lebanese and Syrians will receive the same treatment.” He recommends, not entirely impartially, using NoOnes instead of Binance, his own P2P exchange operated from Dubai and Africa.

Numerous users on Twitter (now X) disagree with him. They say it involves individual users who have donated to terrorist organizations, not all Palestinians. Binance also officially declares that statements like Ray Youssef’s are misleading. “Only a small number of accounts linked to criminal funds are blocked.” Binance complies with internationally accepted sanctions, just like any other financial institution.

The situation could indeed be much more complex, and there are many reasons to believe that Ray Youssef might still be right. Binance has confiscated 189 accounts at the request of the Israeli Defense Ministry since 2021. As reported by the Times of Israel on May 5, 2023, the majority of these accounts belonged to three crypto companies: Al Mutahadun For Exchange, Dubai Company for Exchange, and Al Wefaq Co. For Exchange. These three companies, seemingly crypto exchanges by name, were declared terrorist organizations for forwarding money to Hamas.

If Binance has to freeze accounts of users whose wallets interacted with terrorist organizations, this affects anyone who dealt with these three exchanges. Without knowing too much about the crypto sector in Palestinian territories, it could potentially be everyone who bought Bitcoin or other cryptocurrencies there. Generally, there might not be many exchanges in Gaza, and any exchange operating in Gaza will likely send funds to Hamas in one way or another, as Hamas is the governing body there.

With this regulation, Israel very likely has the right to confiscate the coins of anyone buying Bitcoins, Tether, Ether, and other cryptos in Gaza.