Other Appeal (Center) 54295-12-25 Artyom Nadorenko v. State of Israel – Israel Police (Cyber Unit) - part 2

After the heading "Prohibition of Money Laundering", the main provision included in the order appears in the form structured in the form, as follows: "I hereby command every banking corporation ...  and/or any other financial corporation.  Provide the investigative unit of the Israel Police with the documents and/or items listed below: Bank accounts ....  And all this in the following accounts and portfolios: Tether ...", the account number is also recorded.  No details were presented about the company, its incorporation or its address.

The Ottoman Settlement [Old Version] 1916 Section 2 contains detailed instructions addressed to the recipient of the order, i.e., to Tether, as follows:

12-34-56-78 Chekhov v.  State of Israel, Piskei Din 51 (2)"2.  In addition to the above and immediately upon receipt of the order, I order:

1. Produce and provide the police investigative unit with the valuation of the balances in the seized account, as of the date of the seizure, and from time to time in accordance with the police's request and as long as the order is in effect.
2. Freezing activity in the entire account, including: securities, savings, deposits, provident funds and other financial assets, except for the entry of funds and checks.

• Seizure of any object, including cash in MATI and/or foreign currency, securities for the sale of goods, jewelry, checks and any other object found in any safe used and/or owned by him, including: co-owner, authorized signatory, power of attorney, beneficiary, controlling shareholder, guardian, and transfer it to the Israel Police.

1. Prohibition of any action and/or transaction and/or transfer of any object found in the vaults in question, as well as to permit and assist the Israel Police in opening them, including breaking into them and seizing the objects found in them."

The trial court's handwritten reasoning at the end of the decision is difficult to decipher.

4. The appellant filed a motion by virtue of section 34 of the Criminal Procedure Ordinance (Arrest and Search), 5729-1969 (hereinafter: the "Ordinance" or the "Search Ordinance") to cancel the freeze order, and the Respondent filed a request by virtue of section 35 of the Ordinance to extend it up to 180 days from the issuance of the order.
5. On November 27, 2025, the trial court's decision was given, on which the appeal was filed, which rejected the appellant's request and accepted the respondent's request, and I will present its main points based on the investigative materials presented to it.

1. The Israel Police is conducting an investigation, accompanied by the Central District Attorney's Office, into a large-scale fraud in Israel and around the world known as the "Russian Sting." According to the suspicion, a number of Israelis are involved in fraud related to investments in cryptocurrencies, some of which are in Israel and some are abroad.
2. The cryptocurrencies were allegedly transferred to a number of digital wallets, including the wallet in question, which is the "None Custodial Wallet", in order to obscure the traces of the "stolen" funds, i.e., funds that were allegedly obtained as part of the fraud under investigation.
3. Copied from NevoOn May 19, 2025, the Israel Police sent Tether a "freeze request regarding the wallet".  On May 20, 2025, the order in question was issued (another order 49992-05-25), following which Tether "marked" the wallet address and froze the wallet account.  According to the Respondent, in doing so, Tether acted "voluntarily as part of a desire to maintain the 'cleanliness' of the network", in accordance with the company's policy.  As a result, 7,000,000 USDT was frozen in the wallet.  On May 31, 2025, after the application date, two additional deposits of USDT 5,000 and USDT 995,000 were made, and on July 9, 2025, an additional deposit of USDT 2,729,437 (for a total of USDT 10,729,347) was made.
4. On September 18, 2025, the appellant filed a motion to return the seizure, claiming that he is the legal owner of the wallet, that he is not an Israeli citizen, and that as a result of the seizure, he suffered heavy damage.  He claims that he is a businessman specializing in land development and a licensed supplier in the field of security to the Ukrainian army, whose turnover is tens of millions of dollars a year.  The appellant attached an analysis that was conducted at his request by a company that specializes in this matter, which shows, according to him, that only legal transactions were carried out in the wallet.  The appellant did not appear in person for the hearing in the trial court, according to him, due to the war in Ukraine.

On the merits of the seizure, the appellant, through his counsel, argued that the respondent had no authority to seize outside of Israel the assets of a person who was not an Israeli citizen, and that its application to the foreign company Tether was illegal and that it circumvented the provisions of the Inter-State Legal Aid Law, 5758-1998.  The appellant pointed to the transactions in which he purchased the coins held in his wallet and attached documents to prove his claims.  He added that Tether conducts internal checks and according to its procedures, if there was evidence that tokens were inserted into the wallet, i.e., high-risk USDT transfers, the company would have transferred them to destruction.

1. The Respondent argued that the Applicant does not comply with the rules of law that apply to a 'claimant to the property', that his affidavit was not signed lawfully, and that in his absence from the hearing, he could not be questioned about his claims.  On the merits, the Respondent argued that the order issued on May 20, 2025 "does not bind Tether, since it is a corporation that is not bound by the orders of the Israeli court." However, Tether has imposed a standard of conduct of voluntary cooperation with international law enforcement authorities regarding suspicions of criminal involvement, as it advertises on its website.
2. The trial court found that the focus of the dispute between the parties revolved around the validity and legality of the order given in relation to Tether, even though it is not bound by Israeli law, as well as the question of whether the appellant 'claims a proprietary right' to the property or whether he is a 'suspect', and whether his ownership in the wallet has been proven.
3. The trial court found that there was a reasonable suspicion of the alleged fraudulent infrastructure, including that fraudulent money was "parked" in a wallet.  He also found that there was a reasonable suspicion that the appellant acted to disrupt the investigation proceedings.
4. As to the legality of the order, the trial court ruled that the application to Tether was "made by the respondent voluntarily", and not "on the ex-territorial level and without connection to the Legal Aid Law", on the basis of the respondent's familiarity with the policy of the company for international cooperation with the Israel Police.  He added, "It is clear that the respondent cannot sit idly by and allow the fraudulent money, which was stolen from the victims of the offense, to be smuggled out of the 'parking' wallet in the amount of millions of dollars.  The money laundering route leads to the 'parking' wallet - it is the wallet that is allegedly owned by the applicant." Therefore, "the order was required as part of the respondent's swift action," and "the respondent was therefore entitled to contact Tether, even if voluntary, and it relied on a valid order."
5. The trial court also ruled that the order severely infringes property rights, and that to the extent that the owner of the wallet is a bona fide third party, a balance is required between his rights and the public interest in eradicating money laundering offenses.  However, "the applicant's declaration that he is the owner of the wallet makes him a suspect in the affair, and we are therefore not dealing with the claimant of the case." He added that the appellant "is not entitled to float factual claims in his affidavit as a kind of 'remote control' and expect that they will be accepted for the truth of their content on the ground", i.e., in the absence of his appearance for interrogation in Israel.
6. To this, the trial court added that the appellant did not prove that he was the owner of the wallet, and that the fact that he demonstrated a symbolic transfer from the wallet during the court hearing is not enough, especially since he refused to hand over the code keys to the Israel Police.
7. In light of the above, the trial court rejected the request to cancel the order and ordered its renewal for 180 days as of November 16, 2025.

Description of Proceedings in the Appeal

6. On December 18, 2025, the appellant filed the appeal in question by virtue of section 38A(a) of the Search Ordinance, in which he reiterated his arguments in the trial court (the main points of which were brought in the decision). I will bring only their main points.
7. The appellant is the sole owner of the digital wallet in question, which, by its nature, only the appellant can carry out transactions. After he learned on July 9, 2025, that the token worth 10,729,347.7 USDT had been blocked in his wallet on May 19, 2025, Tether informed him that it had frozen the assets following the request of the Israel Police's Cyber Unit.
8. Subsequently, he received an e-mail from the Israel Police with "a list of demands, some of which were at least unfounded and some of which even violated the appellant's property rights far beyond what was required", as he claimed, and that he was required to provide information that could have exposed him to thefts from the wallet (including the code that allows withdrawals from the wallet). Apparently, this is a letter sent by Superintendent Shimrit Reiss, the head of the Respondent's Cyber Unit, on July 11, 2025 (after the order was issued and before the decision of the trial court on the request to cancel the freeze order).  The letter - which was delivered to him by Tether - is addressed to "To Whom is May Concern", and it reads (originally in English) that "following a criminal investigation carried out by the Israel Police, it was determined that the digital wallet in dispute received cryptocurrency originating from illegitimate sources, and as a result, the assets associated with the wallet were frozen."

We have received your inquiry through Tether regarding your claim of ownership of the frozen wallet.  If you believe you are the rightful owner of the wallet and its contents, you are required to submit official documentation to prove both your ownership and the lawful origin of the assets…"