Victims Claiming Cryptocurrency Seized for Forfeiture
What happens with a federal agency seizes cryptocurrency stolen from a victim?
If the government is awarded the cryptocurrency as part of criminal forfeiture after a plea and sentencing, the victim might file an ancillary claim. If the government seizes the cryptocurrency for a civil asset forfeiture proceeding, the victim might have standing to file a verified claim and answer.
Sometimes the amount seized is enough to make all the victims whole, and sometimes it is not. The victim might be encouraged to skip filing a verified claim so the court can award the seized property to the government. In fact, the letters sometimes say:
Also enclosed is information on how and when to file a claim and answer in this civil forfeiture action if you choose to do so.
However, because the Attorney General intends distribute the virtual currency to all victims on an equitable basis once the District Court has entered an order of forfeiture, we are suggesting you refrain from filing a judicial claim to this property at this time.
Filing a claim with the District Court will only delay the process.
The letter rarely explains that the “equitable basis” amount might be far less than the victim could receive if they file a claim. The letter might not explain that other victims have already filed a claim so one additional claim being filed is unlikely to cause any additional delay.
Instead, the letter might encourage the victim to file a petition for remission or mitigation so that the government can decide what happens to their recovered property instead of the courts.
In some cases, the victim will recover more of their property if they file a claim instead of a petition.
When the government files a complaint for forfeiture, it must typically serve any victims identified in the complaint with a notice to potential claimant, explaining the victim’s rights to file a claim to recover their cryptocurrency when it can be traced to what was seized by the U.S. Government.
Attorneys for Victims of Cryptocurrency Seized for Forforfeiture
If your cryptocurrency was seized for forfeiture, contact an experienced attorney at Sammis Law Firm. We focus on helping the true owner of the cryptocurrency get it back through court action.
Over the years, we’ve helped victims get back their property after it was seized for a forfeiture proceeding. We can explain the different procedures used when filing a claim instead of merely filing a petition.
We understand while filing a petition for remission might not be the best way to proceed. Before you decide, contact us for a free consultation to discuss the pros and cons of each approach.
Call 813-250-0500.
When Filing a Claim is Better Than a Petition
Only an attorney can explain all of the considerations that might go into deciding whether to file a claim, a petition, or both a claim and petition.
The problem with filing a petition, especially if there are not enough funds to make all the victims whole, occurs when they receive only a portion on a pro rata basis based on the government’s determination of the known and unknown victims. As a result, the government might end up keeping a substantial part of the seized property (that would otherwise have gone to unknown victims who are never identified), often without explaining how that determination was made, even to the known victims who cooperated with the investigation.
Another problem occurs with the way the government addresses changes in the value of the cryptocurrency while the forfeiture proceeding is pending. Under 28 C.F.R. § 9.8(c), when the government seizes assets connected to criminal activity, the amount that may be restored to victims is limited to the value of the property at the time of criminal loss.
If the value of the crypto increases after the seizure, that appreciation is not passed onto the victim. For example, if you lose 10 Bitcoin to a fraudster in 2014 (worth only $6,000 at that time), then government return the $6,000 and keep the $90,000 worth of appreciation in 2025. As a result, victims miss out on the financial gains they would have earned if they were not the victims of fraud.
Under those circumstances, there might be clear advantages to the victim if they file a claim instead of only filing a petition.
When Victims Receive a Notice to Potential Claimant
How does the victim know their cryptocurrency was seized by a federal agent? The government is required to send the victim a “notice to potential claimant.” The notice might provide:
This Notice is intended only to advise you of your rights, and your receipt of this Notice is in no way intended to imply that the United States believes that you have a valid claim to any property subject to forfeiture.
You are being noticed pursuant to Rule G of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions as a person or entity who may have an interest in the property set forth in the Verified Complaint for Forfeiture in Rem, enclosed herewith.
A copy of Rule G is attached to this Notice for your reference. If you believe you have a right, title and/or a legal interest in or to the property, you must file a verified claim with the United States District Court within 35 days after the date this notice was sent to you.
The date that this notice was sent may be determined by the mailing date stamped onto the envelope by the United States Postal Service. Your verified claim must state the case name and number found on the Verified Complaint, and comply with the specifications set forth under Rule G(5), which is attached for your reference.
[The notice will tell you the address where the verified claim must be filed.]
If you have not yet retained an attorney, you may wish to seek counsel to assist you in filing a verified claim. However, you are not required to hire an attorney to file a verified claim
In the event you choose to file a verified claim, you or your attorney should refer to Rule G(5)(a)(i) of Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions, which addresses the requirements as to the form and content of a verified claim. Please note that Rule G(5)(b) requires a claimant to file a verified answer to the Verified Complaint or a motion under Rule 12 within 21 days after filing a verified claim.
The notice might also include a copy of “Rule G. Forfeiture Actions in Rem.”
The government’s complaint for forfeiture will request that the court:
- Issue a Warrant of Arrest in Rem, in the form submitted with this Complaint;
- Direct any person having any claim to the Defendant Cryptocurrency to file and serve their Verified Claims and Answers as required by 18 U.S.C. § 983(a)(4) and Supplemental Rule G;
- Enter judgment declaring the Defendant Cryptocurrency to be forfeited and condemned to the use and benefit of the United States; and
- Award such other and further relief to the United States as it deems proper and just.
Victims filing a Petition for Remission
If you received a letter explaining your rights to file a claim or petition for cryptocurrency seized for forfeiture, the letter might encourage you to file a petition. The letter might provide the following:
We encourage you to submit a Petition for Remission or Mitigation Forfeiture to the Department of Justice with respect to this property.
Remission is a mechanism whereby the government may ameliorate a forfeiture in favor of an innocent third party, but in which the petitioner does not contest the forfeiture.
Victims who do not have the practical or legal ability to appear in the forfeiture action can seek remission provided:
- they are victims of the offenses underlying the forfeiture, or victims of an offense that is related to the offenses underlying the forfeiture; and
- other requirements are met, including the lack of any knowing involvement in the offense giving rise to the forfeiture.
The regulations governing Petitions for Remission or Mitigation of Forfeiture are set out at Title 28, Code of Federal Regulations (“C.F.R.”), section 9.1 et seq., and the specific requirements for a Petition are set out at 28 C.F.R. § 9.4.
In general, the Petition must include the following information in clear and concise terms:
- your name, address and social security number (or taxpayer ID number, as appropriate);
- the seizing agency, asset identifier number, and date and place of seizure, if known;
- the district court case number (see above);
- a detailed description of the property claimed, including the amount of any funds, the address or legal description of real property, and the make, model number and serial (or vehicle identification or hull) number of personal property, as appropriate; and
- a description of your claimed interest in the property you are seeking to recover, supported by copies of receipts, bills of sale, contracts, mortgages, deeds, or other documentary evidence. In addition, you should describe all extenuating and mitigating circumstances and other reasons why you believe the Petition should be granted.
The Petition must be sworn to by you or by your attorney. If sworn an attorney, the Petition must be accompanied by your sworn notice of representation pursuant to 28 U.S.C. § 1746 and must be attested to by the attorney as set forth in 28 C.F.R. § 9.9(g). The Petition must be submitted promptly.
Upon receipt of a petition, it will be investigated and a decision to grant or deny will be made by the Chief of the Money Laundering and Asset Recovery Section, Criminal Division, Department of Justice, without a hearing.
Please note that the Petition process is entirely separate from the judicial action in which the enclosed complaint has been filed. There are no specific time limits for the granting or denial of a petition.
Federal Crimes Victims’ Rights Act
The Crimes Victims’ Rights Act (“the Act”), codified at Title 18, United States Code, Section 3771, provides certain rights to victims in federal criminal proceedings.
The Crimes Victims’ Rights Act guarantees crime victims, among other rights:
- The right to full and timely restitution as provided in law(§ 377 l(a)(6));
- The right to proceedings free from unreasonable delay(§ 3771(a)(7)); and
- The right to be treated with fairness and with respect for the victim’s dignity and privacy (§ 3771(a)(8)).
Under the statute, the District Court has the task of ensuring that the victims of crime are afforded these rights, and the court must state the reasons for any decision denying relief sought under the provisions of the CVRA on the record. 18 U.S.C. § 377l(b).
“Although the statute primarily tasks the court with the responsibility of securing these rights, prosecutors and other relevant agents of the Department of Justice are commanded to ‘make their best efforts to see that crime victims are notified of, and accorded’ their rights under the CVRA. United States v. Rubin, 558 F. Supp. 2d 411 (EDNY 2008), quoting 18 U.S.C. § 3771(c)(l).
Once a victim has asserted a violation of a right guaranteed by the CVRA, the district court must take up and decide any such motion “forthwith.” 18 U.S.C. § 3771(d)(3).
Victim’s Right to Notice – 18 U.S.C. § 3771(a)
Under the Crimes Victims’ Rights Act, the victim has the right to “reasonable, accurate, and timely notice” of public court proceedings. 18 U.S.C. § 3771(a).
The Federal Crimes Victims’ Rights Act requires “[o]fficers and employees of the Department of Justice and other departments and agencies of the United States engaged in the detection, investigation, or prosecution of crime shall make their best efforts to see that crime victims are notified of, and accorded, the rights described in subsection [3771](a),” 18 U.S.C. § 3771(c)(1).
The Crimes Victims’ Rights Act instructs the Court to “ensure that the crime victim is afforded” those rights. 18 U.S.C. § 3771(b).
The Crimes Victims’ Rights Act defines a crime victim as “a person directly and proximately harmed as a result of the commission of a Federal offense,” 18 U.S.C. § 3771(e), and recognizes that, for crimes involving multiple victims, the Court has discretion to adopt procedures to accord victim rights without unduly interfering with the criminal proceedings.
Additionally, 18 U.S.C. §3771(d)(2) provides:
In a case where the court finds that the number of crime victims makes it impracticable to accord all of the crime victims the rights described in subsection (a), the court shall fashion a reasonable procedure to give effect to this chapter that does not unduly complicate or prolong the proceedings.
The Crimes Victims’ Rights Act places no limitations on the alternative procedures which a Court may fashion other than that the procedures be reasonable to effectuate the Act and that they not unduly complicate or prolong the proceedings. Id.
Ways the Might Government Avoids Giving a Victim Notice
The Government will complaint that:
- the number of victims makes compliance with the notification requirements outlined in section 3771(a), (b) and (c) impracticable; and
- Neither the Government nor the Court has the resources to accord all of the victims the notice required by subsection 3771(a);
- It is unlikely that the Government will be able to identify, locate, and provide timely and accurate notification to all of the victims in this case prior to its conclusion;
- The task of tracking down and individually notifying the victims is likely to be cost-prohibitive relative to any potential recovery by the victim.
The United States might propose that the Court authorize it to satisfy its notice obligations by providing notice by publication, which the Government has done online at a website managed by the U.S. Department of Justice.
The Government might argue that notice by publication is a reasonable procedure that will give effect to the Act and will not unduly complicate or prolong the proceedings.
Federal courts around the country have approved similar notices in cases involving numerous victims. Examples of such cases include the following:
- United States v. Freedman, No. 5:08CR335, 2009 WL 3784961 (N.D. Ohio Nov. 10, 2009) (permitting victim notification via a national news release in mail fraud case);
- United States v. Peralta, No. 3:08CR233, 2009 WL 2998050 (W.D.N.C. Sept. 15, 2009) (permitting victim notification to approximately 2,500 victims via publication);
- United States v. Saferstein, Crim. No. 07-CR-557, 2008 WL 4925016 (E.D. Pa. Nov. 18, 2008) (overruling defendant’s objections and permitting victim notification in a telecommunications fraud case through continued publication in a national newspaper and website).
- See also United States v. Saltsman, No. 07-CR-641-NGG, 2007 WL 4232985 (E.D.N.Y. Nov. 27, 2007) (website);
- United States v. Stokes, No. 3:06-00204, 2007 WL 1849846 (M.D. Tenn. June 22, 2007) (national publication).
The Government’s online publication directs potential victims to the U.S. Attorney’s website, where links provide victims with continuous updates about the status of the case.
In cases with a large number of victims, the Government might argue that notification by publication is a reasonable procedure that will give effect to the Act and will not unduly complicate or prolong the proceedings.
In United States v. Turner, 367 F. Supp. 2d 319 (EDNY 2005), the Court noted:
“that the Senate sponsors of the CVRA were explicit in their view that the statutory right to proceedings free from unreasonable delay neither ‘curtail[s] the Government’s need for reasonable time to organize and prosecute its case’ nor ‘infringe[s] on the defendant’s due process right to prepare a defense.’ On the other hand, delays for other reasons, particularly
‘for the mere convenience of the parties must take into account the victim’s countervailing
interest in a speedy trial.”
Id. at 43-44, quoting Senate Debate at S4268-69 (statement of Sen. Kyl). Judge Orenstein acknowledged that “[u]nder the statute’s phrasing … a victim could … object to scheduling decisions on the ground that the resulting delay would be unreasonable.” Id. at 44.
This article was last updated on Monday, July 14, 2026.
