עהס 82202-07-25 Alexander Ben Valerie Block v. State of Israel

ISBN 82202-07-25

ISBN 88783-07-25

Judge Ofer Grosskopf:

We have before us an appeal against the judgment of the Jerusalem District Court (the Honorable Judge Ohad Gordon) BExtradition Case 700-05-25 dated July 14, 2025, in which it was determined that the appellant was extraditionable to the United States, in accordance with To the section 3 30The Extradition Law, 5714-1954 (hereinafter: The Extradition Law).

Administrative NoteApparently, due to a mistake, two appeals were opened in this case, which should be considered, in practice, as one.

Background and the sequence of events

1. On December 10, 2024, the United States Government filed a motion to extradite the appellant, Mr. Alexander Block (Gurevich), in order to prosecute him criminally (hereinafter: the extradition request). As detailed in the extradition request, on August 16, 2023, an indictment was filed against the appellant in the Federal Court for the Northern District of California (hereinafter: the U.S.  indictment).  The appellant was charged with the following charges: four counts of fraud and additional activity in connection with computers (18 U.S.C.  § 1030(a)(5)(A), 1030(c)(4)(B)(i) (hereinafter: computer fraud); Transportation of Stolen Goods (18 U.S.C.  § 2314.  hereinafter: the transfer of stolen goods); and three counts of money laundering (18 U.S.C.  § 1956).  The extradition request was attached, inter alia, an affidavit by the federal prosecutor, Adv. Ajay Krishnamurthy (hereinafter: the plaintiff's affidavit) and the affidavit of FBI agent Michael Hilton (hereinafter: the federal agent's affidavit).  In the extradition request, it was claimed that the appellant exploited a loophole in a computerized system called Nomad Bridge (hereinafter: Nomad), which is owned by Illusory Systems, Inc.  In order to steal digital currencies worth over $2.8 million, and then carried out various actions in order to obscure their origin.  The summary of the charges against the appellant will be detailed below; But first, a brief background is needed to understand them.
2. Digital currencies are a computerized unit used as a means of payment. Digital currencies are issued, traded, and "held" on blockchain networks (for different definitions of the term digital currencies, see: The Committee for Examining the Regulation of the Issuance of Decentralized Cryptocurrencies to the Public, Interim Report 8 (2018); Moran Ofir and Ido Sadeh, "Do ICOs Issue Securities? On the Regulation of Digital Tokens Issued by Companies," Mishpatim 437, 444-446 (2021) (hereinafter: Ofir and Sadeh)).  A blockchain network is a decentralized database, which is held simultaneously on many computers, and includes a complete record of all previous actions (such as transactions and transfers) made on that network.  The database is updated simultaneously with all computers operating on the network, and it does not depend on the decision of one central organization or another, hence the decentralized nature of the network (see: Ofir and Sadeh, pp.  441-442; Yaakov Enoch, "Smart Contracts," Explosive Technologies: Challenges in Israeli Law 279, 281-282 (Lior Zemer et al., eds., 2022)).  Transactions on the blockchain network are visible to all users on the network - but the parties to each such transaction are not identified by their name, but according to a public address (consisting of a sequence of digits and letters), to which other users on the network can transfer digital currencies (this address is hereinafter: a digital wallet).  See: Yonatan Yovel, "Cryptocurrencies: Conceptual, Legal and Regulatory Challenges," Din Ve-Devarim 16 447, 475-476 (2023); State Comptroller Digital Currency Taxation 5 (2024)).  In addition, many blockchain networks make it possible to define smart contracts using them.  Smart contracts are software that, when certain predetermined conditions are met, independently executes contractual agreements that have been embedded in the code that defines the smart contract (a kind of "standard contract without human contact").  For more information, see: Kevin Werbach & Nicolas Cornell, Contracts Ex Machina, 67 Duke L.    101, 108 (2017); Elad Finkelstein, "'Smart' Contract Law - Between Technological Progress and Regulation," 12 Mishpat 349, 355 (2021) (hereinafter: Finkelstein)).

The Ottoman Settlement [Old Version] 1916

3. 12-34-56-78 Chekhov v. State of Israel, P.D.  51 (2)Since each blockchain network constitutes a separate decentralized database, it is not possible to convert directly between one digital currency and another, and therefore, as a rule, in order to carry out a transaction between different digital currencies, bridging services between the relevant networks are required (see details in paragraphs 14-20 of the Federal Agent's affidavit).  The Nomad system provides such mediation services, in a format known as "Lock-And-Mint".  The way the system works is that a user "locks" digital currencies on a single blockchain network, so that they cannot be used for other transactions.  The locked digital currencies are held in a digital wallet owned by Nomad.  In exchange for locking the digital currencies, the user receives digital currencies on another blockchain network, called "tokens", whose value is equal to the locked digital currencies (hereinafter: the tokens).  The tokens can be used on the other blockchain network and can also be exchanged back for the locked digital currencies (for more on the relationship between such tokens and other types of assets held on blockchain networks, see: Ofir and Sadeh, at pp.  446-448).  These mediation services were provided, inter alia, through smart contracts created by Nomad (hereinafter: the smart contracts).
4. Copied from Nevoaccording to the extradition request, during the month of June 2022, a software update was made in the Nomad system, resulting in an unintentional security breach in the smart contracts. The smart contracts used a specific command to verify that the digital currencies on one blockchain network were indeed "locked," and no longer usable, before the smart contracts transferred equivalent tokens to the user on another blockchain network (this command is called "proveAndProcess()").  As a result of the flaw in the smart contracts, users had the option to forward a message that caused the system to use a different command than the intended one (a command called "process()").  hereinafter: the security breach).  This command allowed users to receive tokens on one blockchain network, without "locking" digital currencies of similar value on another network.  In the extradition request, it was claimed that the appellant, who operated under the name "eth" (hereinafter: Bitlik), located this security breach.  First, he made six experimental transfers, in which he instructed the Nomad system to issue tokens for him, without "locking" digital currencies in exchange for them.  At the same time as these transfers, the appellant deposited the digital currencies in Nomad's digital wallet, in order to prevent the security breach from being discovered.  After seeing that Tov, around August 1, 2022, the appellant executed, through the security breach, four transfers from Nomad's digital wallet on the Ethereum blockchain network to the address associated with the user "Bitlick" without "locking" digital currencies in exchange for them (these transfers will be referred to hereinafter: the main transfers).  In total, in these transfers, the appellant was issued tokens worth more than $2.8 million.  The appellant then transferred the tokens he received to a number of digital wallets and converted them into other digital currencies, allegedly, with the aim of concealing the origin of the tokens.  The appellant's actions exposed the security breach to other Nomad users, and enabled those entities to empty a digital wallet owned by Nomad, which contained digital currencies that belonged to other users worth over $186 million.  A few days later, the appellant returned some of the tokens that had been taken to Nomad, and contacted a senior Numad official through the social network "Telegram" (under an account bearing the name "@alvagur").  The appellant offered to return to Nomad the rest of the tokens he had taken, in exchange for receiving payment for bringing the security breach to Nomad's attention.  The parties began negotiations, but at a certain point the appellant severed contact with Nomad, and the company turned to law enforcement authorities in the United States.  As part of the investigation carried out by the authorities, the appellant was identified as the owner of the digital wallet associated with the "Bitlik" user.
5. On May 2, 2025, the Respondent (hereinafter: the State) filed a petition, in which it sought to declare the Appellant eligible for extradition. The state argued that the acts described in the extradition request constituted extradition offenses under Israeli law.  In particular, it was argued that the acts attributed to the appellant constitute offenses of disruption or interference with computer material and penetration of computer material in order to commit another offense (according to sections 2 and 5 ofthe Computers Law, 5755-1995 (hereinafter: the Computers Law)); offenses of fraudulent receipt under aggravated circumstances and theft under aggravated circumstances (under sections 415 CIFA and 384A(b) ofthe Penal Law, 5737-1977); as well as offenses under sections 3(a) and 4 of the Prohibition of Money Laundering Law, 5760-2000 (hereinafter: the Money Laundering Law).
6. The appellant raised a variety of arguments against his extradition before the District Court. The appellant also submitted an opinion written by Adv. Amit Levin (hereinafter: the opinion on behalf of the appellant).  In the opinion, it was argued that the actions attributed to the appellant constituted a lawful use of the smart contracts, since it was not claimed that he had committed prohibited manipulation of the code behind the smart contracts.  It was further argued that the appellant could not be charged with an offense of money laundering, since all transactions on blockchain networks are public and open to all users of the network, and it was not even claimed that the appellant carried out various actions to disguise the origin of the tokens taken.  As will be detailed below, after an oral hearing that took place before us, the appellant announced that he was focusing the appeal on two of the conditions set out in the Extradition Law - the existence of a "presumption of charge" in the extradition request, and the criminality of the acts attributed to him under Israeli law.  Therefore, I will focus on the conclusions of the trial court in relation to these conditions.
7. In the judgment of the District Court, dated July 14, 2025, the petition was granted, and it was determined that the appellant was extraditional.

First, the court found that the affidavits attached to the extradition request presented a "basis for the charge" in relation to all the offenses attributed to the appellant.  The court noted that the appellant did not dispute the claim that he was behind the user "Bitlik" even after he was given an opportunity to do so, and in any event, with regard to his identification as "Bitlick", sufficient evidence was brought for this stage.  On the level of criminality of the acts, the court noted that the appellant did not refer to the existence of parallel prohibitions in the United States and Israel for the acts attributed to him, but focused on the claim that these were legitimate actions, based on the opinion he submitted.  However, the court ruled that its conclusions could not be adopted.  First, it was noted that this was an Israeli lawyer who expressed his opinion regarding the criminality of the appellant's actions - an issue in the law, which is not a matter for an expert opinion.  In any event, it was emphasized that the conclusions in the opinion on behalf of the appellant are not unequivocal; that they are based on a factual basis that is different from what is stated in the extradition request; and that they were determined without sufficient evidence to substantiate them.