Israeli police arrested five suspects on November 10 as part of an investigation into roughly 16 million shekels, or about $5 million, in cryptocurrency transactions allegedly arranged through a WhatsApp group without the required financial services license or tax reporting. The National Unit for Combating Economic Crime within Lahav 433 said the five held different roles in the group, with individual trades sometimes worth hundreds of thousands of shekels.
Investigators suspect that proceeds from crypto trading were moved into legitimate bank accounts under loan agreements designed to conceal their origin. During searches of the suspects' homes, officers seized cryptocurrency wallets, computers and tens of thousands of shekels in cash. The suspects were questioned on suspicion of money laundering, providing financial asset services without authorization and obtaining something by fraud. Authorities said more people could be questioned as the inquiry continues.
The case highlights Israel's wider crypto tax reporting gap. A November 2024 State Comptroller audit found that only about 500 people per year reported crypto activity between 2018 and 2022, compared with an estimated potential filing base of at least 200,000 users, a reporting rate of roughly 0.25%. The audit estimated potential crypto-related tax collections at 2 billion to 3 billion shekels and identified delays in tax software, missing calculation tools and limited training for auditors.
Enforcement has already targeted unlicensed services. In March 2025, authorities shut down the Bitin exchange and imposed a fine of approximately $460,000. A voluntary disclosure program drew only 58 taxpayers, covering around $50 million in crypto capital, far below official expectations of up to $1 billion in tax revenue. Meanwhile, a government tender published on November 3 seeks a system to calculate tax arising from crypto disposals, with bids due between December 3 and December 15, 2026.
Traditional banks are also moving into digital assets. Israel Discount Bank announced on November 11 that customers will be able to trade Bitcoin and Ether through its mobile app from November 26, using Fireblocks infrastructure and integrated tax handling. Bank Leumi separately outlined plans to introduce Bitcoin, Ether and Solana trading in early 2027. The combination of stronger enforcement and regulated bank access signals a shift toward formalizing crypto activity in Israel.
