• Israeli authorities arrest three residents suspected of spying for Iran, with two allegedly paid in cryptocurrency for espionage tasks.
• The use of crypto in espionage has grown, raising concerns over digital currencies' role in state-sponsored activities and cyberattacks.
• The ongoing Israel-Iran conflict increasingly spills into digital warfare, with blockchain tech becoming a new front for geopolitical tensions.

Israeli authorities have arrested three residents on suspicion of spying for Iran. While all three suspects are unrelated, reports revealed that two of them allegedly received crypto payments as compensation.

These arrests mark the latest chapter in the ongoing conflict between the two nations. This conflict has increasingly spilled into the digital space, with cryptocurrency emerging as a tool for espionage and cyberattacks.

Israel-Iran Cyber War: Crypto Payments Fuel Espionage

According to local media reports, Israeli police and Shin Bet (Israel Security Agency) carried out the operation. Authorities arrested an unnamed Tel Aviv resident for allegedly taking photographs of public officials’ homes, documenting military bases, and spray-painting graffiti.

The 27-year-old suspect was detained on Sunday. Police confiscated several electronic devices and computers. These were believed to have been used for communication with an Iranian agent. The suspect supposedly received thousands of dollars in crypto to carry out tasks.

On Monday morning, the man appeared before the Tel Aviv Magistrate’s Court, where a judge ordered his detention extended until June 26.

The second suspect was Dmitri Cohen, a 28-year-old man from Haifa. As per reports, he allegedly gathered intelligence on high-profile targets, including the future daughter-in-law of Prime Minister Benjamin Netanyahu, Amit Yardeni. 

Cohen reportedly collected information on Yardeni and her family in the weeks leading up to her now-postponed wedding to Avner Netanyahu. He also photographed private residences and surrounding areas and passed the information to an Iranian agent via a dedicated phone used solely for espionage activities.

Authorities say that the Iranian handler promised him $500 per task. Furthermore, he received thousands of dollars in cryptocurrency since his initial contact with the agent.

A prosecutor’s affidavit was filed against Cohen on Monday. Haifa District Attorney’s Office will likely file charges in the coming days.

Lastly, the third suspect was a 19-year-old from the Sharon region. Police arrested the person on suspicion of sharing classified information with an Iranian operative during the ongoing conflict.

“Near the outset of the war with Iran, security forces arrested two Israelis on the same suspicions. Their identifying details were barred from publication after a gag order was placed on the probe,” The Times of Israel reported.

These incidents are nothing new. Over the years, authorities have arrested dozens of Israelis for similar activities, with only a few cases reaching sentencing. 

In October 2024, local police detained seven Jewish Israelis from Haifa, originally from Azerbaijan, for conducting over 600 missions for Iran, including photographing military bases like Nevatim and Ramat David.

Meanwhile, the use of crypto raises broader concerns. In an interview with BeInCrypto, a former CIA officer warned of the risks digital currencies pose in enabling state-sponsored espionage. This threat extends beyond the Middle East to global security.

Besides espionage, blockchain technology is increasingly becoming a new front in geopolitical warfare. Just last week, BeInCrypto reported that the pro-Israel hacker group, Gonjeshke Darande, exploited Iran’s largest crypto exchange, Nobitex, to steal $81.7 million across several networks. 

This highlights cryptocurrency and blockchain’s growing role in international cyber conflicts, further emphasizing their use as tools in modern warfare.