TLDR
- Israeli police arrested five people in a probe of about 16 million shekels ($5 million) in crypto trades.
- Police say the group used fake loan deals to make crypto proceeds look legal in bank accounts.
- The trades were arranged through a WhatsApp group, according to investigators.
- A 2024 state audit found only about 500 people a year reported crypto activity, out of at least 200,000.
- Israel Discount Bank will let customers trade Bitcoin and Ether in its app from Nov. 26.
Israeli police have arrested five people in a money laundering case tied to about 16 million shekels, or roughly $5 million, in crypto transactions. The arrests took place on Tuesday. Police say the activity was arranged through a WhatsApp group.
Investigators from the National Unit for Combating Economic Crime, part of the Lahav 433 unit, led the case. They suspect the group offered crypto services without a license. They also say the trades were not reported to Israel’s tax authorities.
How the Alleged Loan Scheme Worked
Police say the five suspects held different roles in the chat group. Single trades involved hundreds of thousands of shekels, while the full activity reached millions.
The group allegedly moved crypto proceeds into bank accounts as transfers labeled loans. Investigators say agreements were drawn up to back up that story. According to The Jerusalem Post, officers searched the suspects’ homes on Tuesday morning.
Officers seized wallets, computers and tens of thousands of shekels in cash. The five were questioned on suspicion of money laundering, fraud and offering financial asset services without a permit.
In a Nov. 10 statement, a police spokesperson said the case is still open. Police expect to question more people as the inquiry continues.
Reporting Gap in Israeli Crypto Tax
The arrests come after a state audit pointed to weak crypto reporting. The State Comptroller found in November 2024 that about 500 people reported crypto activity each year from 2018 to 2022. At least 200,000 people could have filed, which puts the rate near 0.25%.
The audit also found problems inside the Tax Authority. Its capital gains form had not been changed to fit the volume of crypto trades. Buying software to calculate crypto tax had dragged on for more than three years.
Tax assessors lacked calculation tools. VAT auditors had received no crypto training by the end of the review.
The Tax Authority announced two other arrests on Oct. 6 over suspected failures to report crypto activity. One case involved trades worth tens of millions of dollars. In the other, an Ashdod resident allegedly did not report income from about $13 million in trades between 2019 and 2021.
Authorities also shut down the exchange Bitin in March 2025 for offering trading without a license. It was fined about $460,000. Its operator had been denied a license in 2022 over a tax-related conviction.
A voluntary disclosure program began in August 2025. Globes reported that only 58 taxpayers used it by June, covering about $50 million in crypto capital. Officials had hoped for up to $1 billion in tax revenue.
Israel Discount Bank said on Nov. 11 that customers can trade Bitcoin and Ether in its mobile app from Nov. 26. Tax handling will be built into investment accounts, and the service will use Fireblocks infrastructure.
A government tender published Nov. 3 seeks a system to calculate tax on crypto disposals. Bids can be submitted from Dec. 3 to Dec. 15, 2026.
