James Cirrone

Following more than two years of investigation, Israeli police told prosecutors that they should charge Moshe Hogeg, a businessman behind a number of crypto startups over the years, for his role in an alleged $290 million crypto scam.&nbsp;



The police claim that Hogeg raised the inordinate sum of money from Israelis and investors across the world with the pretense of funding four separate crypto projects, the Times of Israel <a href="https://www.timesofisrael.com/police-seek-charges-in-fraud-case-against-crypto-businessman-moshe-hogeg/">reported</a> Wednesday. Instead of doing that, Hogeg lined his own pockets during 2017 and 2018, the police say.&nbsp;



Hogeg was involved in a project with blockchain smartphone startup Sirin Labs. While Sirin Labs is still afloat and selling phones, Hogeg was sued by Foxconn for nearly $6 million in 2020 for not paying manufacturing bills.&nbsp;



Police interviewed around 180 people who were involved. Their dozens of searches yielded 900 pieces of evidence, money and property, the Times of Israel reported.&nbsp;



Following their investigation, police have leveled multiple accusations against Hogeg. These include aggravated fraud, unauthorized theft, falsification of corporate documents, forgery, money laundering, and tax violations, among others.



Hogeg’s troubles with Israeli authorities began in 2021 when he was arrested after police suspected his involvement in fraud and sex crimes. Hogeg, who was released into house arrest a month later, denies all the accusations against him.



Hogeg’s most recent involvement in the crypto space appears to be with Tomi, a Web3 company focused on decentralization and free speech. Hogeg identifies himself as a cofounder of Tomi, and in a <a href="https://twitter.com/moshehogeg/status/1683127139812405248">post</a> on X from July, added that he would “remain an advisor and investor.”







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Israeli police say Moshe Hogeg engaged in $290M crypto fraud, recommend charges

Sebastian Sinclair

An Israeli pensioner and the country’s second-largest commercial bank have agreed to dismiss a long-running case involving substantial profit from a bitcoin investment made ten years ago.



Esther Freeman, a 70-year-old retiree, and Bank Hapoalim agreed to drop the case after reaching an agreement, with each party paying their own legal fees, <a href="https://www.calcalistech.com/ctechnews/article/hkskmbas2" target="_blank" rel="noreferrer noopener">local media</a> reported Saturday.&nbsp;



The terms of the agreement were not disclosed. The bank did not immediately return Blockworks&#8217; request for comment.



The settlement ends a two-year legal tussle in which Freeman sued the bank in 2021 for denying her the chance to deposit her bitcoin proceeds, which had ballooned to more than 100 times her initial investment. Since filing her claim, bitcoin has dropped more than 50%.



Freeman invested NIS 10,000 ($2,700) in bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) in 2013 using cash through a third party, at a time when digital asset exchanges were virtually non-existent. By July 2021, with bitcoin trading at around $58,000, her investment was worth close to NIS 1 million ($273,000), per the report.



In its defense, the bank argued it was doing so under the provision of newly established regulations and that Freeman&#8217;s purchase was not undertaken from a regulated or monitored entity, but rather from a private person in cash.



In reaction to increased customer transactions in digital assets, the Bank of Israel&#8217;s Banking Supervision Department introduced a <a href="https://www.boi.org.il/en/communication-and-publications/press-releases/the-bank-of-israel-announces-the-publication-of-a-draft-regulation-in-the-area-of-amlcft-risk-management-derived-from-the-provision-of-payment-services-related-to-customer-activity-in-virtual-currencies/" target="_blank" rel="noreferrer noopener">draft regulation</a> last year attempting to address AML/CFT concerns.



The regulation mandates banks conduct appropriate risk assessments, set policies and trace a digital asset’s trajectory from acquisition to fiat.



Under those rules and according to the bank, &#8220;it is not possible to trace the money path in relation to the purchase of the [bitcoin]&#8221; and &#8220;only in cases where the funds used to purchase the virtual currency were withdrawn and received in the same account can the receipt of the funds be approved.&#8221;



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Israeli retiree made $270K in BTC profits. Her bank wouldn’t take her money.

Shalini Nagarajan

Binance is no stronger to controversy and has regularly found itself entangled in several scandals in recent years.



An Israeli anti-terror finance squad halted suspicious Binance accounts the government says are linked to Islamic State and Hamas, two notorious extremist groups with a history of violence and terrorism, forcing Binance to once again <a href="https://blockworks.co/news/cftc-binance-compliance-hires">defend its compliance record</a>.&nbsp;



The agency seized some 190 accounts on Binance over the past 18 months, Reuters <a href="https://www.reuters.com/world/middle-east/israel-seized-binance-crypto-accounts-thwart-islamic-state-document-shows-2023-05-04/" target="_blank" rel="noreferrer noopener">reported</a> on May 5, citing <a href="https://nbctf.mod.gov.il/he/PropertyPerceptions/Documents/%D7%A6%D7%AA%201-23.pdf" target="_blank" rel="noreferrer noopener">documents</a> from Israel’s counter-terror authorities. Two of those accounts were tied to Islamic State and others were linked to the infamous Hamas group.&nbsp;



The document stated that the seizure of the accounts was necessary to prevent the activity of ISIS and hinder its ability to achieve its goals. It didn’t provide clarity on the value of the confiscated cryptoassets, or elaborate on the precise nature of the connection between the accounts and ISIS.



An individual identified as Osama Abuobayda, a 28-year-old Palestinian, was named as the owner of the two ISIS-linked Binance accounts seized by Israeli authorities.



Nearly all the others were owned by three Palestinian currency exchange firms, Al Mutahadun For Exchange, Dubai Company for Exchange and Al Wefaq Co. For Exchange.



The agency <a href="https://nbctf.mod.gov.il/en/Pages/23042023EN.aspx" target="_blank" rel="noreferrer noopener">announced</a> in April that it had confiscated roughly 500,000 shekels ($137,870) from about 80 Binance accounts associated with the three Palestinian currency exchange firms.&nbsp;



Binance issued a <a href="https://www.binance.com/en/blog/community/our-response-to-reuters-1363137884256691497" target="_blank" rel="noreferrer noopener">blog</a> in response to Reuters’ report, denying inadequate compliance with anti-money laundering requirements and asserting its collaboration with international counter-terrorism authorities.



“With regard to the specific organizations mentioned in the article, it&#8217;s important to clarify that bad actors don&#8217;t register accounts under the names of their criminal enterprises,” the company wrote.&nbsp;



“This is why our team collaborates with law enforcement, and leverages information that is only available to them in order to identify individuals operating accounts for illicit organizations.”



The exchange added that it’s already helped law enforcement freeze more than $1 billion so far this year.



In Israel, the Defense Minister can seize assets tied to terrorists, whether it’s piles of cash, fancy cars or digital assets. The actions taken by Israel’s National Bureau for Counter-Terror Financing demonstrates how governments are paying closer attention to crypto companies and taking steps to prevent illegal activities.&nbsp;



Binance has previously faced scrutiny for questionable behavior. In July last year, Reuters reported that the crypto exchange <a href="https://blockworks.co/news/crypto-traders-in-iran-skirted-binance-ban-following-us-sanctions">breached US sanctions by catering to Iranian customers</a> until Sept. 2021. Additionally, the platform allegedly <a href="https://blockworks.co/news/binance-china-evade-kyc">assisted Chinese users</a> in evading local regulatory measures to trade crypto, despite the country’s crypto ban.



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Israel Seizes Binance Accounts Allegedly Linked to ISIS, Hamas

Katherine Ross

A digital shekel is still a ways off, according to a report from the Bank of Israel.



While the bank <a href="https://www.boi.org.il/media/j40nvorg/april-2023-potential-scenarios-for-deciding-to-issue-a-digital-shekel.pdf">said</a> that there has been no decision made either in favor or against a digital shekel, a handful of scenarios could force Israel to act.



The US or European Union announcing a <a href="https://blockworks.co/tag/cbdc" target="_blank" rel="noreferrer noopener">CBDC</a> would be an “important factor” in its decision. The Bank claimed that the probability that developed economies — outside of the US or EU — issuing a central policy in the next few years is “significant.”



The Bank of England is currently <a href="https://blockworks.co/news/the-bank-of-england-is-looking-to-build-a-digital-pound">mulling</a> over a digital pound, and the UK is also looking <a href="https://blockworks.co/news/stablecoins-efficient-bank-of-england">closely</a> at stablecoins for payments.&nbsp;



The BOE, alongside the UK Treasury, released a <a href="https://www.bankofengland.co.uk/paper/2023/the-digital-pound-technology-working-paper">paper</a> in February outlining considerations from both entities on a digital pound.&nbsp;



The digital pound would be a “safe, trusted form of money accepted for everyday transactions by households and firms, in the same way as Bank of England notes are today” which is different from other cryptocurrency assets which are “highly speculative assets, whose value is extremely volatile, because there is nothing behind them.”



Cash is king — for now — but a change to the use of cash by Israelis would potentially cause the bank to reconsider digital currency.&nbsp;



“The public’s ability to use central bank money is important both in maintaining the public’s trust in other means of payment, since it can always convert those into central bank money, and in order to maintain individuals’ and businesses’ ability to make transactions while minimizing the intervention of private entities,” it said.&nbsp;



The bank is also considering technological advances that would justify a digital currency, similar to the US approach.&nbsp;



Later this summer, the <a href="https://blockworks.co/news/fed-cbdc-robert-kennedy-fednow">US plans to roll out FedNow</a>, which is a “modern instant payment solution” that connects financial institutions across the country. Fed Governor Michelle Bowman <a href="https://www.federalreserve.gov/newsevents/speech/bowman20220817a.htm">said</a> that the service “addresses the issues that some have raised about the need for a CBDC.”



The US Treasury and lawmakers are still <a href="https://blockworks.co/news/us-treasury-weighs-prospect-for-cbdc-adoption">weighing</a> the consequences of issuing a CBDC, but rollouts such as FedNow could help to engage in the “technological development of a CBDC so that we would be able to move forward rapidly if a CBDC were determined to be in the national interest,” said Nellie Liang, the undersecretary of the Treasury for domestic finance, in a <a href="https://blockworks.co/news/us-treasury-weighs-prospect-for-cbdc-adoption">speech</a>.&nbsp;&nbsp;



As with other economies, the Bank of Israel noted that it is in a “holding pattern” until it has seen evidence that either convinces or dissuades Israel from pursuing its own digital currency.



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Israel Wants to See ‘Significant’ Use of Stablecoins for Payment Before Considering Digital Shekel

<div id="highlights-block_634fa8b0f6de7" class="highlights">
 <ul>
 <li>The concept will include the digitization of a series of government debt to be issued to select participants</li>
 <li>The private permissioned blockchain is compatible with the Ethereum virtual machine</li>
 </ul>
 
</div>



The Israeli government is planning to test blockchain-based digital bonds as it seeks to modernize financial market processes and reduce associated costs.



In a joint effort, the Office of the Accountant General in the Ministry of Finance and the Tel Aviv Stock Exchange (TASE) — the country’s only public equities bourse — will issue bonds via a permissioned private distributed ledger technology platform being readied for live testing.



The proof-of-concept will include the digitalization of a “new series” of government debt to be issued to select local and foreign primary dealers, marking the first time Israel has embarked on such a venture.



Digital assets infrastructure and custody solutions provider Fireblocks and US-based cloud computing tech firm VMWare will assist in the technical execution of the platform, while TASE has been tasked with leading the project.



Tokenized bonds will be sent to participants&#8217; digital wallets while the issuance consideration, in digital currency, will be transferred from the participants to the state of Israel’s own wallet, according to a statement.



The pilot project will begin within the next few days and is expected to be completed by the end of the first quarter of 2023.



“Israel is almost the only market in the world where government bonds are traded on the main exchange, so it’s an opportunity to generate a pilot, with the involvement of the State of Israel and leading international banks,” TASE’s head of clearing Orly Grinfeld told Blockworks in an email.



Unlike some experiments to tokenized bonds, such as <a href="https://cms.blockworks.co/major-french-bank-wants-to-back-the-dai-stablecoin-with-40m-in-bonds/" target="_blank" rel="noreferrer noopener">Société Générale’s partnership with MakerDAO</a> in October 2021, which used the Ethereum public blockchain, this one will remain entirely centralized for now. However, a Fireblocks spokesperson told Blockworks that the permissioned blockchain is compatible with the Ethereum virtual machine (EVM), and therefore, “if the Ministry of Finance wanted to issue digital assets on a public chain in the future, there would be little difference.”



The platform, which will also be based on smart contracts and tokenization, will be designed for the clearing and trading of non-crypto digital assets, TASE said.



<h3 class="wp-block-heading">Blockchain bond issuance</h3>



Typically, government debt raising through the issuance of bonds often requires large-scale coordination between various systems. Blockchain tech is often praised for its ability to expedite financial transactions while cutting out intermediaries.&nbsp;



In this instance, TASE is hoping its test will demonstrate the tech’s use in reducing bond issuance costs, speeding up settlement times, improving transparency and streamlining processes.



Following the first <a href="https://www.icmagroup.org/market-practice-and-regulatory-policy/fintech-and-market-electronification/distributed-ledger-technology-dlt/frequently-asked-questions-on-dlt-and-blockchain-in-bond-markets/5-what-are-dlt-bonds/" target="_blank" rel="noreferrer noopener">DLT bond</a> issued in 2018 by the <a href="https://www.worldbank.org/en/news/press-release/2018/08/23/world-bank-prices-first-global-blockchain-bond-raising-a110-million" target="_blank" rel="noreferrer noopener">World Bank</a>, TASE and the ministry said they had been following developments in the financial markets, including tokenizing various assets. 



Both said they were eyeing central bank digital currency test runs of financial institutions, which have begun to pick up in speed.



Several countries have begun leveraging DLT-based bonds to raise money for infrastructure from the debt instrument, including the Philippines, which earlier this year raised 11 billion Philippine pesos ($186 million) after investors rallied behind its debut.



TASE and the government also said they could read the writing on the wall when it came to a shift in the digitization of financial instruments.



“The financial markets are undergoing drastic transformations in recent years,” TASE CEO Ittai Ben-Zeev said in the statement. “We hope to see Israel spearhead financial technology while being the first to implement cutting-edge technologies and upgrade the capital market.”



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