Crypto Investigation by the Israel Tax Authority: What the Two October 2026 Cases Have in Common

On 6.10.2026, the Israel Tax Authority announced two separate crypto investigations, each involving suspected concealment of income from digital currency trading. In the first case, a manager and partner in a staffing company from Ashdod is suspected of failing to report approximately $13 million in trading income during 2019–2021. In the second case, conducted jointly with Lahav 433, a trader is suspected of concealing trading activity amounting to tens of millions of dollars. The investigations are ongoing and the suspects are presumed innocent.

• Date of publication: 6.10.2026, in two press releases issued by the Israel Tax Authority.

• First case: Suspected failure to report approximately $13 million in trading income during 2019–2021. The investigation is handled by the Assessing Officer – Investigations, Jerusalem and the South, and the suspect was released under restrictive conditions.

• Second case: Suspected tax offenses and money laundering involving trading amounting to tens of millions of dollars. The investigation is conducted by the Assessing Officer – Investigations, Haifa, and the ECFL Unit at Lahav 433. The suspect's detention was extended until 11.10.2026.

• Source of the cases: The Crypto Department within the Intelligence Division of the Israel Tax Authority's Investigations Branch.

• Potential penalty: Section 220 of the Income Tax Ordinance prescribes up to seven years' imprisonment for anyone who willfully acted to evade tax.

• Case status: The investigations are ongoing and no indictment has been filed.

The October investigations come after a year of steps taken by the Israel Tax Authority in this field, and five weeks after the voluntary disclosure procedure closed:

1. August 2025: The Israel Tax Authority published a voluntary disclosure procedure approved by the Attorney General.

2. 14.1.2026: A joint operation by the Israel Tax Authority, the Capital Market Authority, the Anti-Money Laundering Authority, and the Israel Police against dozens of financial service providers operating without a license.

3. 31.8.2026: The procedure ended. According to Israel Tax Authority data, 823 applications were submitted, 203 of which involved digital assets, with declared capital of approximately NIS 482.5 million.

4. 6.10.2026: Publication of the two investigations.

What the Two Cases Have in Common

In both cases, the suspicion is that entire trading activity went unreported and that efforts were made to conceal the funds. In the press release on the first case the Authority stated that the funds were transferred through several of the suspect's wallets in order to conceal them. In the second case, the suspicion involves a bank account held in another person's name, unreported foreign accounts, and a luxury vehicle registered under someone else's name.

The first case includes an additional detail: identification documents linking the suspect to the trading account were obtained from the Binance exchange. The activity under investigation dates back to 2019–2021, meaning the Authority is now investigating trading from five or more years ago.

The announcements do not create any new obligation. Gains from the sale of virtual currency were already taxable: according to Income Tax Circular 05/2018, a virtual currency is classified as an asset rather than a currency, and its sale constitutes a capital event. Anyone who reported their disposals and paid the applicable tax need not take any action in light of these investigations.

Those who traded on an exchange that identifies its customers and did not report are in a different position. The State Comptroller's report from November 2024 noted that automatic exchange of information on crypto assets under the OECD's CARF standard is expected to begin in 2027, covering 2026 data. The voluntary disclosure procedure is no longer open, and we have written about the remaining options on our page about unreported crypto gains.

Those whose bank refused to accept their sale proceeds can pay the tax through the track established by the Israel Tax Authority in Form 909.

1. Compile your complete trading history from all exchanges and wallets, starting from the first year of activity.

2. Compare it against the annual tax returns you filed and verify that all disposals were reported.

3. Check whether foreign bank accounts or foreign trading accounts were included in your returns.

4. If you have received a summons for investigation or a document request, consult an attorney before responding. For the differences between an audit and a criminal investigation, see representation in income tax investigations.

This area is handled at the firm by Adv. & CPA Shlomi Vaknin, who served for approximately a decade as a national supervisor in the Professional Division of VAT at the Israel Tax Authority.