Community distrust grows as Binance faces backlash over asset freeze.
Key Takeaways
- Allegations suggest Binance froze Palestinian assets under an Israeli government order.
- The crypto community's reaction highlights concerns over centralized exchange vulnerabilities.
Recently, allegations have emerged that Binance has frozen the assets of Palestinian users following a request from the Israel Defense Forces (IDF).
These claims are based on a document purportedly from the Israeli government, which cites an administrative seizure order under the Law on Combating Terrorism. The document indicates that the seized funds were linked to organizations labeled as terrorst, with authorization from Israel’s Minister of Defense.
Richard Teng, CEO of Binance, has responded to concerns about the exchange freezing Palestinian accounts, labeling the reports as “FUD” (fear, uncertainty, and doubt).
FUD. Only a limited number of user accounts, linked to illicit funds, were blocked from transacting. There have been some incorrect statements about this.
As a global crypto exchange, we comply with internationally accepted anti-money laundering legislation, just like any other…
— Richard Teng (@_RichardTeng) August 28, 2024
“FUD. Only a limited number of user accounts, linked to illicit funds, were blocked from transacting. There have been some incorrect statements about this,” Teng stated.
The crypto exchange recently took action to freeze certain Palestinian accounts following an order from Israeli authorities. The Israeli government claimed these accounts were being used to finance organizations it considers as “terrorist entities,” ostensibly in violation of anti-terrorism laws.
Government scrutiny of digital assets
Governments are increasingly scrutinizing digital assets as potential tools for financing activities they deem threats to national security.
For crypto exchanges like Binance, the situation underscores the complex regulatory landscape they must navigate. These platforms are facing mounting pressure to implement robust anti-money laundering and counter-terrorism financing measures while balancing user privacy concerns.
Teng’s response reflects Binance’s attempt to maintain its position in the market amid regulatory challenges. By framing the account freezes as standard compliance practice rather than targeted action, the exchange aims to reassure its user base and fend off potential reputational damage.
Counter-narratives
The CEO’s statement aims to counter narratives suggesting Binance may be unfairly targeting Palestinian users. Instead, Teng emphasized that the exchange’s actions are part of its global compliance efforts and are applied uniformly across all jurisdictions.
Israel’s order to freeze these accounts is part of a broader initiative to disrupt financial networks allegedly supporting terrorism. The government is now pushing for the permanent confiscation of the assets held in these frozen accounts, arguing that given the nature of the accusations, the funds should be seized entirely rather than just frozen.
Despite the document not naming Binance explicitly, the crypto community has expressed significant outrage, particularly due to the platform’s history of compliance with Israeli law enforcement.
Ray Youssef, former CEO of Paxful and current CEO of the P2P marketplace Noone App, commented, claiming that there was indeed a freeze.
“This is 100% confirmed. Israel is putting massive pressure on Binance and all other exchanges to blanket seize the funds of ALL Palestinians. The document in the original post has 500 names but there have been many such versions of it with many more names,” Youssef said on X.
Further exacerbating community concerns, the screen-recorded video shared by Youssef allegedly shows a message from Binance’s customer service confirming that the freezing of a Palestinian user’s account was ordered by Israeli law enforcement. This incident has intensified calls for Binance to clarify its position amidst growing distrust.
Historically, Binance has cooperated with Israeli authorities, including the seizure of accounts linked to Hamas and the Islamic State in efforts to combat terrorism. However, the current allegations could potentially drive users towards decentralized platforms, emphasizing the crypto mantra: “Not your keys, not your coins.
