Israel accused of seizing crypto wallets from traders in Gaza

In an instant, Said Muhammed’s dreams vanished.

Muhammad, 24, concluded last year that cryptocurrencies looked like a promising investment and, importantly, one that anyone could participate in, one that wasn’t just the rich or those from rich countries.

“I read about cryptocurrencies on social media. It looked like the safest business of the future, he said.

He also attended online courses in crypto trading.

“I wanted to work in this field. I wanted to have a future.”

He made his first investment in early 2021, $180 he had saved from a previous job.

After a year, everything looked good. His decision to enter the market coincided with an industry-wide bull run – when the prices of most cryptocurrencies rose significantly. Muhammad’s original investment was now worth nearly $2,000, a tenfold return.

“I was very happy and excited when I made a profit. I started planning for the future.”

However, the happiness and excitement did not last long. One day, his electronic wallet and all its contents disappeared, seized, Muhammad believes, by the Israeli military, which has been trying to crack down on crypto trading in Gaza.

“It was like another brutal Israeli bombing. I was shocked and I didn’t know why? Why me?” he said.

Muhammad tried several times to get the money back, and turned to Binance for help. But the cryptocurrency exchange offered no help, and he lost hope when he learned—from others who had experienced the same thing—that the Israeli military was responsible for his loss.

“Two thousand dollars may seem like a small amount of money, but I planned to start my own small business or even get married. This would have changed my life.”

His loss hasn’t changed his mind about the potential of cryptocurrencies, but Muhammad isn’t going back to trading, he said.

“I don’t want to work in the cryptocurrency business. I think it’s a good business, but not for Gazans, not under the control of the Israeli occupation,” he said.

Economic blockade

According to Hussein Abu Saada, head of the Gaza Police Cybercrime Department, the Israeli military’s seizure of cryptocurrency wallets from Palestinians in Gaza is part of a systematic policy to limit their financial resources in order to impose full control over the Palestinian economy.

Israel began confiscating Palestinian digital currency wallets in July 2021, claiming that these wallets were used by Hamas to transfer money to its military wing.

Israeli Defense Minister Benny Gantz was quoted at the time as saying: “The intelligence, technological and legal tools that enable us to get hold of terrorists’ money around the world constitute an operational breakthrough.”

In fact, the seizures undermine one of the crypto industry’s fundamental claims, namely that cryptocurrencies would be nearly impossible to track and seize.

Since the beginning of 2022, Gaza’s cybercrime department has received more than 200 complaints related to cryptocurrencies, according to Abu Saada.

– We investigated all the complaints. None of the victims had anything to do with military activities or military organizations. They were all money changers or ordinary traders.”

Abu Saada said the Israeli measures against cryptocurrency traders in Gaza are arbitrary and unjustified and are only aimed at tightening the economic blockade imposed on the Gaza Strip.

He also said some complainants had said their e-wallets had not been seized but were closed by exchanges, apparently because they were residents of Gaza.

“We noticed that there is a bias against clients in Gaza just for being Palestinian,” he concluded.

Despite repeated attempts to elicit a response, Binance – the exchange used by Muhammed – did not comment for this article.

Why cryptocurrency?

Since 2020, Gazans have increasingly started buying and trading cryptocurrencies.

According to economist Muhammad Abu Jayab, editor of Gaza-based Al Eqtisadiyah newspaper, there are several reasons why Palestinians in Gaza are attracted to the crypto industry. Most important is the Israeli blockade of the Gaza Strip, the resulting economic hardship, lack of jobs and uncertainty about the future.

Unemployment in Gaza reached a staggering 46.6 percent in the first quarter of this year.

The poverty rate has reached almost 80 percent

Because it is open to everyone and easy to learn, cryptocurrency trading has become an outlet for thousands of young people in Gaza struggling with unemployment and poverty.

This despite – or perhaps because of – its extreme volatility. For example, Bitcoin, the best-known of hundreds of cryptocurrencies, peaked at nearly $65,000 last November after doubling in value in just four months.

Today it trades for just under $23,000, having lost nearly two-thirds of its value since.

In other words, volatility means that there is money to be made. But there is also a lot of money to lose, especially worrying for those who borrow money or sell jewelery to invest.

Ahmed Atallah (26) had high hopes when he started shopping.

Atallah graduated from the Faculty of Commerce at the Islamic University of Gaza in 2019. He spent two years looking for a job without success.

“I started at the business faculty because I wanted to become an accountant. It is very frustrating to spend five years studying and in the end all my efforts are in vain,” he told The Electronic Intifada.

Frustrated, Atallah saw real hope in cryptocurrency trading.

“Cryptocurrency trading is available to everyone. I thought it would end the nightmare of unemployment,” he said, “so I borrowed some money and started trading.”

“Constant Fear”

But with the Israeli attack and the cryptocurrency’s inherent volatility, traders are living under enormous stress.

“We live in constant fear,” Atallah said. “Over the past year I have heard of so many people whose electronic wallets have been seized by the Israeli occupation. The thought that I could be next is terrifying.”

The Israeli attack worries not only current cryptocurrency traders, but also those whose electronic wallets have already been confiscated, who fear that the Israeli military may take further action against them.

The owner of a switchboard in Gaza had his wallet seized last year.

He did not want his name reported for fear that “Israeli intelligence might read this article and take other arbitrary measures against me.”

He also did not want to reveal how much money was in the seized wallet.

But, he said, he filed a complaint with an Israeli court and sent all the necessary details and documents.

“I didn’t get a response and I don’t expect them to return my money. This is an occupation. They steal and kill and break the law and are never held accountable.”

Abdallah al-Naami is a journalist and photographer living in Gaza.

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