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The Defense Ministry says it has begun taking control of digital wallets being used by the Hamas terror group that contain virtual currencies from overseas donations.

Defense Minister Benny Gantz approved the seizure of a series of digital wallets on June 30 after a joint operation uncovered a web of electronic wallets used by Hamas to raise funds using Bitcoin and other cryptocurrencies, the ministry said.

The stockpiles of cryptocurrency were being operated from the Gaza Strip and have been part of Hamas efforts to raise funds from abroad following its bruising 11-day conflict with Israel in May.

In addition to Bitcoin, the Defense Ministry has succeeded in seizing such payments made in other digital currencies, including XRP, Ethereum, Tether and joke crypto Dogecoin, in accordance with the 2016 Counter-Terrorism Law.

The intelligence, technological and legal tools that enable us to get our hands on terrorists money around the world constitute an operational breakthrough, Gantz was quoted as saying in the statement.

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Noa Moshiach, the CEO of the Israeli Bitcoin Association, said that the news proves the safety of digital currencies.

Israel Bitcoin Association CEO Noa Mashiah. (Ricky Rachman)

The seizure and forfeiture of Hamass donations proves that Bitcoin is a safe currency, said Moshiach. Criminals who make use of this financial system will find out the hard way that the open transaction log, the blockchain, will expose them and allow law enforcement agencies to act against them.

Moshiach said the seizure marks a significant improvement over the anti-money laundering ban and also over international bank accounts hidden behind a bank secrecy wall. The news only further proves that Israeli regulators should adopt and use Bitcoin and other digital currencies, as it makes it possible to expose the bad and do good with the good.

Omri Segev Moyal, CEO of the cyber crisis company Profero, said the digital footprint of such currency trading exchanges allows for security operatives to swoop in.

Once you go beyond the boundaries of the blockchain to the worlds of trading platforms, you immediately lose anonymity and then, as in the present case, states and law enforcement agencies are able to locate and freeze the currencies of criminal and terrorist organizations, said Moyal.

In addition, when the network is completely exposed, you can very accurately track the trajectory of the coins and locate their final destination.

A Palestinian Hamas government employee signs to receive 60 percent of their long-overdue salary while others wait in the queue, at the main Gaza Post Office, in Gaza City, on November 9, 2018. (Adel Hana/AP)

In 2019, Hamas issued an appeal for donations from supporters via Bitcoin to help counter its financial woes. Months later, it launched an experimental program using a complex cryptocurrency system to raise money from international donors.

Last year, the United States Justice Department said it had seized millions of dollars from cryptocurrency accounts that terrorist groups, including al-Qaida and the Islamic State, relied on to finance their organizations and violent plots. Law enforcement officials said they seized more than 150 cryptocurrency accounts at the time that laundered funds to and from accounts operated by Hamas.

The Associated Press contributed to this report.

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Defense Ministry starts seizing Bitcoin being used by Hamas - The Times of Israel