The operation – the first of its kind – targeted digital wallets linked to Iran's Quds force and the Lebanon-based militant group Hezbollah, Mr Gallant said on Tuesday.
The anonymity of cryptocurrencies make them attractive to terror organisations and criminals across the globe.
Israel has targeted Gaza-based militant group Hamas in a similar manner before.
Mr Gallant said the bust sets "a [precedent] in exposing the source of terror funding via digital currencies".
"We have thwarted the transfer of millions of dollars to terrorists," he added.
Mr Gallant said that the operation was a joint effort between the Ministry of Defence, Mossad, the Israeli military and the police, as well as other smaller organisations.
The bust highlights Israel's increasingly complex task of hampering Iran's sophisticated operations, which it sees as a way of destabilising the country via covert means and proxies.
"Since its establishment, Israel has faced complex security threats. Over the years, as technology advanced and developed, so did the threats", Mr Gallant said.
"In addition to our fight against terror organisations and their proxies, we are now also tasked with identifying and cutting off the resources intended for terrorism,” he added.
“This is not a simple mission, and it only becomes more complex once we deal with digital currencies. Anyone who finances terrorism and/or maintains financial ties with the perpetrators of terror must know that they, too, will become targets.”
A report in May said that Israel had seized almost 200 Islamist-linked cryptocurrency accounts on the Binance exchange site since 2021.
A week prior, the military wing of Hamas said it would stop raising Bitcoin funds, citing security concerns.