Could Israel eradicate Hamas and other terrorist networks without a single person killed and without any boots on the ground or planes in the sky?

That was what the Israeli Ministry of Defense wanted to know when it contacted Lionsgate Network, a 13-person Israeli startup that helps individuals and private investors recover money from their hacked or scammed cryptocurrency wallets. 

Could Lionsgate Network apply its knowhow to blocking the terrorists’ access to their virtual cash? After all, even terrorists need money to buy more rockets or fuel to power their extensive network of underground tunnels. 

“If you want to hit terror, you need to cut off their stream of capital,” Bezalel Raviv, CEO of Lionsgate Network, tells ISRAEL21c. “You don’t have to kill people to get it done. You just need to kill the transfer of funds.”

Kidnapping yields a jackpot

Those funds are not just about acquiring more projectiles or moles for digging underground tunnels. 

“Reports indicate that, if a Gazan citizen kidnaps an Israeli, they stand to receive compensation of $1.2 million from Hamas,” Raviv says. 

“Given the oppressive economy in Gaza, where a full day of labor is valued at only $13, it would take an average Gazan 352 years to earn that amount. Kidnapping an Israeli is like winning the jackpot. Having pushed Gaza into poverty, Hamas has shifted its focus from the previous religious rhetoric of 72 virgins in paradise to a purely greed-driven agenda.”

That is, the 72 virgins promised to Muslim martyrs are no longer the main story because Hamas recruits need money here and now, not in the next lifetime.

Hamas has, as is now well-known, been receiving payment for its “activities,” initially from Qatar, which sent cash stuffed in leather suitcases with Israeli permission. 

As Gaza’s borders closed due to the ongoing conflict, Hamas diversified its funding sources, turning to cryptocurrencies.

“If Israel had proactively blocked Hamas’s crypto-wallets before October 7, the war might have concluded by now,” Raviv speculates.

Iran is bankrolling Hamas

Iran contributes roughly $100 million a year to Hamas via crypto-exchanges. 

“The entire amount of money in the world today stands at around $83 trillion,” Raviv says, with crypto transactions representing about $1.4 trillion – “1.5% of that big pile.” 

A chunk of this, Raviv adds – possibly tens of billions of dollars – “is with leaders of groups such as Hezbollah, Islamic Jihad and Hamas – all in the crypto game.” 

Raviv sees Lionsgate Network as “the security guard for crypto banking, watching over transactions to ensure safety for both current and new users in the crypto world.”

When the Israel Defense Forces came calling, it was for a legal need.

“When the conflict started on October 7, I received a call from a friend managing one of the war rooms at the Ministry of Defense,” Raviv recalls. 

She told Raviv, “We suspect some crypto-wallet addresses are linked to Hamas, but we lack the necessary evidence to freeze them.”

Unlike the terrorists, Israel operates according to international law.

Clues left by Hamas

Before Lionsgate Network had even initiated its first-step analysis, Raviv observed that the wallets in question were associated with donation campaigns aimed at assisting Gazans. 

“However, the clues left by Hamas provided a different perspective — it was a classic ‘red hat’ scenario, a wolf dressed as a sheep.”

Raviv and his team were able to provide the much-needed evidence the army required, leading to the successful freezing of tens of millions of dollars from around 100 crypto-accounts, according to official reports. 

“We’ve named it the Balaam Act,” Raviv says, referencing the biblical figure who was initially hired to curse Israel but ultimately bestowed a blessing upon the Jewish people. 

“In this context, funds initially intended to support terror can now be repurposed to reconstruct the damage caused by those acts of terror” or to pay for temporary housing for hundreds of thousands of displaced Israeli citizens.

Since 2021 – before Lionsgate Network even existed – Israel’s National Bureau for Counter-Terror Financing (NBCTF) has issued seven orders to seize crypto-funds held by three of the exchanges used by Gaza-based terrorists. 

Two of these orders alone resulted in the freezing of $134 million. The NBCTF says that, at times, as much as half the money going through these exchanges went to Hamas.

That said, the wallets identified in the seizure orders “likely only represented a fraction of the wallets used by Hamas,” The Wall Street Journal reports. “It’s a drop in the ocean,” a former Israeli official said. 

Secret sauce

Raviv is cautious not to share too much of Lionsgate Network’s proprietary methods for identifying an entity from a crypto-transaction. 

However, the essential action involves monitoring when a tracked account engages in a transfer or purchase. 

“We focus on identifying how you cashed out. If someone buys Nike shoes using crypto, it provides us with a closed circle regarding the person’s identity – not to mention their shoe size!” Raviv explains.

Although cryptocurrency wallets can be set up without the holder’s name, “growing worldwide regulations mean that most places of commerce will ask you to identify yourself now. That’s one of the many loopholes we look for when running our analysis,” Raviv explains.

What if a terror group doesn’t make a purchase but is hoarding its ill-gotten bounty? Lionsgate Network has a number of tricks up its virtual sleeves. 

“In case of suspicion or a hot tip from reliable sources, we can uncover digital footprints tied to your identity – potentially without your awareness,” Raviv explains. 

“Actions as seemingly innocuous as using Google from a coffee shop leave discernible traces. Whether it’s hacks, phishing, or ‘black hat’ activities, even the most adept individuals inadvertently leave digital fingerprints. We only need one in order to cross reference. Achieving complete anonymity in the digital realm is nearly impossible.”

Lionsgate Network can also evoke a response. For example, they might send an NFT to fraudulent wallet owners that hints law enforcement is on to them and they ought to move their money now to keep it safe. As soon as it’s moving, Lionsgate Network is all over it.

Thinking outside the box

Lionsgate Network has been working with clients for 14 months. The company’s mandate up to now has been to help private investors recover their cash after being crypto-scammed.

Once Lionsgate Network has identified and contacted the bad actor, most cases are settled within 24 hours, Raviv says. 

The company marked the resolution of its 1,000^th case last July, seizing a substantial amount from Binance, the world’s largest crypto-exchange.

Lionsgate Network’s analysts earn a commission based on success. 

“They are incentivized to think out of the box,” Raviv says. The company also pays out 1.5% of the final settlement amount to those who can provide tips on where the money is or who can help solve a client’s case.

The work is mostly manual. Yes, there are software tools that Lionsgate Network’s analysts can use, but because bad actors change their “attire” for each case, consistent patterns are elusive and human intelligence is required.

The backstory

The company is based in Tel Aviv, although ever since the Covid-19 years the team has been working remotely. 

Lionsgate Network is bootstrapped, with most of its startup funding coming from Raviv himself. 

“In my twenties, I was a singer/songwriter,” he tells ISRAEL21c. But making a living in the music industry is tough, so after 10 years, Raviv shifted to investment banking.

After a hacker broke into his own crypto-wallet, Raviv realized that “millions of others must have had the same problem.” Raviv was able to get his money back. The next step was to help others. 

Raviv stresses that the company currently only blocks terrorist accounts from Israel. While the company has been profitable “from the first month,” Raviv aims eventually to raise money in order to expand Lionsgate Network’s terror-busting footprint to other countries.

When it comes to helping individual investors, there are no border limitations. 

Well, almost none.

“When we launched our first global campaign, we got tens of requests from individuals in Iran,” Raviv tells ISRAEL21c. “We had to decline. Israeli law forbids us from interacting with the citizens of Iran. Generally speaking, though, we can service anyone where the law allows it.”

Crypto scams and hacks are growing. That’s because most Western countries are trying to phase out cash. Already in Israel and Europe, you can’t pay for something in cash if it’s more than around $2,000. 

With 83 million crypto-wallets out there – racking up a stunning loss of $16 billion between 2021 to 2023 — this Israeli lion that can help you recover your money (or stop terrorists from using theirs) has clearly come roaring out of the gate.

For more information, click here.

Canada’s financial intelligence agency says it anticipates that criminals will increase their use of cryptocurrency to raise, move and hide funds outside the traditional banking system.

In its latest annual report, released Monday, the Financial Transactions and Reports Analysis Centre of Canada highlights its development of strategic intelligence on the role virtual assets play in money laundering and terrorist financing.

The agency, known as Fintrac, says the most prevalent form of money laundering involving virtual currencies is the movement of proceeds of fraud and ransomware attacks.

Fintrac identifies money linked to illicit activities by electronically sifting millions of pieces of information each year from banks, insurance companies, money services businesses, securities dealers, real-estate brokers, casinos and others.

In turn, it discloses intelligence to police and other law-enforcement agencies about the suspected cases.

2:05
Sam Bankman-Fried’s FTX crypto empire ‘built on lies’: prosecutors

Advertisement

“Fintrac continues to operate in a challenging environment with new and evolving technologies and financial products, rapidly shifting global financial systems and geopolitical events constantly shaping our work,” agency director Sarah Paquet says in the report.

Businesses that exchange foreign currencies, transfer money, cash or sell money orders or traveller’s cheques, or deal in virtual currency are required to register with Fintrac before offering these services to the public.

Fintrac warns that the use of unregistered money services businesses continues to pose challenges for those seeking to detect money laundering and terrorist financing through traditional financial channels.

In May 2022, Fintrac published an advisory to help businesses and the general public protect themselves against illicit activities tied to underground banking.

The advisory spelled out key attributes of underground banking in Canada, particularly through unregistered money services businesses in metropolitan Vancouver, the Greater Toronto Area, and, to some extent, in the Calgary-Edmonton corridor.

0:36
Cops warn of crypto scam after Winnipegger loses $168,000

Fintrac says it has since seen an increase in reporting on money laundering associated with underground banking, as well as the identification of individuals and entities suspected to be operating unregistered money services businesses.

“Suspicious transactions reported to Fintrac have highlighted the significant role of third-party intermediaries, such as professional money launderers and money mules, in facilitating underground banking and the laundering of criminal proceeds,” the report says.

Underground banking through unregistered money services businesses continues to be attractive to international figures looking to evade sanctions or engage in other types of illegal activity, such as terrorist financing, the report adds.

&copy 2023 The Canadian Press

India’s Financial Intelligence Unit has officially registered 28 Virtual Digital Assets and crypto service providers.

The news comes as confirmed by Pankaj Chaudhary, the Minister of State for Finance, in a parliamentary discourse.

This move also follows the Indian Finance Ministry’s March mandate, requiring crypto businesses to align with the Financial Intelligence Unit, an entity pivotal in combating money laundering. The directive necessitates these businesses to adhere to the Prevention of Money Laundering Act (PMLA), mandating stringent verification processes like Know Your Customer protocols.

A noteworthy aspect of the ministry’s response is its extension of these guidelines to offshore crypto exchanges catering to the Indian market, emphasizing that non-compliance will invite action under the PMLA.

Despite the registration of prominent exchanges like CoinDCX, WazirX and CoinSwitch, none of the 28 registered entities are offshore companies.

Follow Us on Google News