Binance, the world’s largest cryptocurrency exchange, is facing serious accusations of seizing Palestinian cryptocurrency assets at the request of the Israeli government. These claims were brought to light by Ray Youssef, co-founder of the P2P crypto platform Paxful and CEO of Noones P2P platform. On August 26, Youssef took to X (formerly Twitter) to allege that Binance had confiscated funds from Palestinians following instructions from the Israel Defense Forces (IDF).
Youssef claimed that Binance seized all Palestinian funds and refused to return them, even after appeals were made. He warned that this could be just the beginning, with other countries like Lebanon and Syria potentially facing similar actions in the future. Youssef’s assertions were reportedly based on several sources, including a letter from Israeli authorities that was allegedly forwarded by Binance. He expressed concern that this move could lead to broader asset seizures across the region, emphasizing the phrase, "Not your keys, not your coins" to highlight the importance of controlling one's own assets in the crypto world.
In response, Binance denied that it had blocked funds from all Palestinians, stating that only a small number of accounts tied to illicit activities were restricted. Binance emphasized that it adheres to international sanctions laws, just like other financial institutions, and that the affected accounts were involved in illegal activities, which justified their restriction. A Binance spokesperson clarified that these actions were in compliance with global regulations and expressed a desire for peace in the region, but did not provide further details about how many accounts were involved or the specifics of the illicit activities.
Youssef's claims referenced a letter from Israel’s Ministry of Defense, signed by Paul Landes of the National Bureau for Counter Terror Financing. According to Youssef, this letter was used by Binance in its response to Palestinians who appealed for their funds to be returned. The letter, written in Hebrew, cited Israeli anti-terrorism laws that give the Minister of Defense the power to temporarily seize property, including cryptocurrency, linked to declared terrorist organizations. It justified the seizure of assets and wallets associated with such organizations.
This controversy comes at a challenging time for Binance, which has faced legal and regulatory scrutiny in various countries. Earlier this year, Binance was sued in the United States under the U.S. Anti-Terrorism Act for allegedly providing "substantial assistance" to terrorists. The lawsuit involved victims of a Hamas attack in Israel and accused Binance of facilitating transactions for terrorist organizations, adding to the company’s legal woes.
Despite the seriousness of these allegations, Binance insisted that the number of affected users was minimal and that its actions were consistent with international law. However, the company did not disclose exactly how many accounts were impacted or when the restrictions were implemented.
Palestine represents a small fraction of Binance's user base, accounting for just 0.05% of its web traffic over the past year, according to data from SimilarWeb. This puts Palestine’s traffic share in line with countries like El Salvador and Albania, which each contribute around 0.06%, and Malta, with about 0.03%. Despite its small market share, web traffic from Palestine to Binance surged by over 80% since August 2023, reflecting growing interest in cryptocurrency within the region.
In summary, the allegations against Binance for confiscating Palestinian cryptocurrency have stirred significant controversy, raising questions about the exchange's role in geopolitical conflicts and its adherence to international laws. While Binance has denied the broader claims and stressed its commitment to legal standards, the situation highlights the challenges global cryptocurrency platforms face in balancing technology, finance, and international regulations.
