Police said in a Nov. 10 announcement that Lahav 433’s economic crime unit detained the suspects over cryptocurrency exchange transactions allegedly conducted through deceptive methods and not reported to tax authorities. Investigators expect to question more people as the inquiry continues.
According to The Jerusalem Post, the five suspects had different roles in a WhatsApp group used to arrange cryptocurrency trades. Individual transactions involved hundreds of thousands of shekels. Investigators suspect the activity also included financial services provided without a required license, and that loan agreements were used to present crypto proceeds transferred to bank accounts as loans.
Officers searching the suspects’ homes on Tuesday morning seized wallets, computers suspected of being used in the alleged offenses and tens of thousands of shekels in cash, the newspaper reported. The five were questioned on suspicion of money laundering, providing financial asset services without a permit and obtaining something through fraud. The allegations have not been established in court.
The case comes amid persistent gaps in Israel’s crypto tax reporting. A November 2024 State Comptroller audit found an average of 500 annual reports of cryptocurrency activity from 2018 to 2022, against an estimated minimum of 200,000 potential filers—a reporting rate of about 0.25%. The audit also found that tax forms and reporting frequency had not been adapted to crypto trading, assessors lacked calculation tools, and VAT auditors had received no cryptocurrency training by the end of the review. Procurement of software to calculate crypto capital gains tax had taken more than three years.
Recent enforcement and policy efforts have included the March 2025 shutdown of Bitin for unlicensed crypto trading, with a fine of about $460,000, according to earlier reporting by crypto.news. Separately, Globes reported in June that 58 taxpayers had used a voluntary disclosure program to correct crypto tax filings, covering about $50 million in crypto capital. Officials had expected up to $1 billion in tax revenue from undeclared profits.
Banks and tax agencies are also developing services and tools. Israel Discount Bank said on Nov. 11 that customers would be able to trade Bitcoin and Ether through its app from Nov. 26, with tax handling integrated into investment accounts. A government tender published Nov. 3 seeks a Tax Authority system to calculate tax on crypto disposals; bids are scheduled to be submitted from Dec. 3 to Dec. 15, 2026.
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