Israel Freezes $1.5M in Iranian Wallets, Cracks Down on Crypto-Backed Espionage

Israel has taken decisive action to disrupt Iran’s alleged use of cryptocurrency for terrorism financing, seizing 187 crypto wallets suspected of being linked to the Islamic Revolutionary Guard Corps (IRGC). The National Bureau for Counter Terror Financing (NBCTF), under the Ministry of Defense, claimed the wallets were used for “the perpetration of a severe terror crime” and that they were “property of the IRGC.” The seizure order, issued under the 2016 Anti-Terrorism Law, effectively froze $1.5 million in funds, though the wallets had previously transacted $1.5 billion in Tether’s stablecoin USDT.

Blockchain analytics firm Elliptic noted that while the wallets had substantial transaction volumes, the firm could not independently verify their direct connection to the IRGC. Elliptic’s co-founder, Tom Robinson, highlighted the possibility that some of the addresses were controlled by cryptocurrency service providers or part of broader transaction infrastructure. This aligns with the complexity of cryptocurrency ecosystems, where funds can move through multiple intermediaries, making direct attribution challenging without additional forensic investigation.

Tether, the company behind USDT, took action in response to the seizure, blacklisting 39 of the identified addresses on September 13, effectively freezing $1.5 million in transactions. This move was made in collaboration with the NBCTF and reflects the growing use of built-in blacklisting features in stablecoins to prevent illicit activity. Tether’s actions followed previous efforts to freeze funds linked to scams and other criminal activity. For example, the T3 Financial Crime Unit—collaborating with TRON and TRM Labs—had already frozen $100 million in USDT across 2,459 addresses. This highlights the increasing role of stablecoin issuers in assisting law enforcement efforts to track and freeze suspicious funds.

The latest developments come amid broader efforts by both Israel and the U.S. to counter Iran’s cryptocurrency-related activities. In June 2025, a pro-Israel hacking group known as Predatory Sparrow targeted Nobitex, Iran’s largest crypto exchange, stealing $90 million in digital assets before rendering the funds inaccessible by sending them to “burned” wallets. Nobitex has long been suspected of having ties to the IRGC. The U.S. has also taken similar steps, with the Treasury Department sanctioning crypto addresses linked to the IRGC-Qods Force that had handled $332 million in USDT. In a separate action, the U.S. Justice Department seized nearly $585,000 in USDT from Iranian businessman Mohammad Abedini, who was allegedly linked to the IRGC’s drone program.

Amir Rashidi, director of digital rights and security at the Miaan Group, speculated that Israel may have obtained the information about the 187 wallets through cyberattacks on Iran’s infrastructure. He noted that there had long been rumors of the IRGC using cryptocurrency to circumvent international sanctions. This underscores the growing intersection of cyber operations and financial enforcement, where digital footprints and hacking capabilities play a critical role in identifying and neutralizing illicit financial flows.

The effectiveness of these actions, however, remains a subject of debate. While the seizure of 187 wallets may disrupt some of the IRGC’s financial activities, analysts caution that many of the wallets may not be directly controlled by the organization. Instead, they could be part of intermediary services or infrastructure used by multiple actors. This raises questions about whether such seizures will have a significant, long-term impact on the IRGC’s ability to fund operations. Nevertheless, the move signals a broader trend in which regulators and financial institutions are increasingly leveraging blockchain analytics and stablecoin capabilities to track and freeze illicit assets.

As the global regulatory landscape continues to evolve, the Middle East has emerged as a key region in shaping the future of crypto regulations. Countries like the UAE have implemented comprehensive frameworks that balance innovation with investor protection, while others, such as Saudi Arabia and Bahrain, are integrating digital assets into their broader financial ecosystems. These efforts reflect a growing recognition of the need for robust compliance and anti-money laundering measures in the digital finance space. As cryptocurrency adoption continues to rise, the challenge of enforcing regulations and preventing illicit use remains a pressing concern for regulators and industry participants alike.