Seizures of Bitcoin Cryptocurrency for Forfeiture
What happens when the federal government or a state government agency seizes bitcoin or other cryptocurrency for forfeiture?
The type of property seized might include Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin Cash ZCash, Bitcoin SV (BSV), or Bitcoin Gold (BTG). Other types of cryptocurrencies that might be seized during criminal or civil asset forfeiture proceedings include Ethereum, Ethereum Classic, Ripple, Monero, Litecoin, or Tezos.
The government might allege that tumblers were used to launder criminal proceeds. By using tumblers, the owners of bitcoin are able to process transactions in a manner designed to frustrate the tracking of individual transactions through the Blockchain.
After the seizure, you should retain an experienced civil asset forfeiture attorney to file a verified claim. When the verified claim is filed with the agency that seized the cryptocurrencies, then the government has 90 days to either return the cryptocurrency or file a complaint for court action in the appropriate United States District Court.
If an Assistant United States Attorney files a “Complaint for Forfeiture” in the district court, the complaint might allege that the property constitutes, or was derived from criminal activity, including drug trafficking or the sale of narcotics, money laundering, computer hacking, or a conspiracy to commit those types of crimes.
After the complaint is filed, notice is given to all interested parties to appear and show cause why the judgment of forfeiture should not be entered.
Your attorney can then file the verified claim in the district court, along with an answer, counterclaim, and motion to dismiss the government’s complaint. If you prevail in court, the government might also be ordered to pay your attorney fees.
Attorneys for the Seizure of Cryptocurrency for Forfeiture
The attorneys at Sammis Law Firm represents clients in cryptocurrency seizures for civil asset forfeiture, including the seizure of Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin SV (BSV), or Bitcoin Gold (BTG), Ethereum, Ethereum Classic, Litecoin, or Tezos.
Whether the cryptocurrency was seized by federal agents from your computer wallet, mobile wallet, online wallet, or cold storage account, we can help.
If you received a notice of the seizure then you must act quickly. An experienced asset forfeiture attorney to help you prepare and file a verified claim to contest the seizure for forfeiture. Your attorney can negotiate with the AUSA for the return of the cryptocurrency seized.
Your attorney can also file an answer, counterclaim, and motion to dismiss the complaint.
Statutes that Authorize Judicial Forfeiture of Bitcoin
If the government believes that your property represents the proceeds traceable to criminal activity, then it might be seized and subject to forfeiture proceedings pursuant to 18 U.S.C. § 981(a)(l)(C).
Most civil asset forfeiture cases involve property believed to be connected to drug trafficking or money laundering which is subject to civil asset forfeiture pursuant to 21 U.S.C. § 881(a)(6).
Even funds that did not originate as proceeds from the illegal activities might be considered to be involved in money laundering activities in violation of 18 U.S.C. § 1956 if the property is commingled with or used to conceal and disguise the nature, location, source, ownership, or control of the criminal proceeds, or were involved in a conspiracy to launder such proceeds.
Cryptocurrency seizure are subject to civil asset forfeiture pursuant to 18 U.S.C. §§ 981(a)(l)(A) and 981(b). Therefore, the judicial forfeiture action might be authorized by 18 U.S.C. §§ 981(a)(1)(A), 981(a)(1)(C), 981(b), or 21 U.S.C. § 881(a)(6).
- Title 18, United States Code, Section 981(a)(1)(A) provides for civil and criminal forfeiture of any property, real or personal, involved in a transaction or attempted transaction in violation of Title 18, United States Code, Sections 1956, 1957, or 1960, and any property traceable to such property.
- Title 18, United States Code, Section 981(a)(1)(C) provides for the civil forfeiture of any property, real or personal, which constitutes or is derived from proceeds traceable to any offense constituting a “specified unlawful activity” or a conspiracy to commit such offense.
- Title 21, United States Code, Section 881(a)(6) provides for the forfeiture of all moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance or listed chemical, all proceeds traceable to such an
exchange and all money used or intended to be used to facilitate any violation of Subchapter I, Chapter 13, Subchapter I of Title 21 United States Code.
Procedures for Cryptocurrency Forfeiture Proceedings
As a general rule, a cryptocurrency exchange will comply with an order of seizure issued by the court when such an order is served on the exchange by the seizing agency.
The types of cryptocurrency exchanges that will comply with such an order include Bianance, Gemini, and Coinbase. After the seizure, the authorities will often transfer the cryptocurrency to an IPD-controlled wallet.
The procedures for seizing cryptocurrency vary depending on whether the cryptocurrency is held in a hot storage wallet or a cold storage warrant. For cold storage, the seizing officer will move the cryptocurrency from the wallet subject to seizure to the wallet controlled by the seizing agency.
Then the seizing officer will use the blockchain to confirm that the exchange was successfully accomplished. The authorities will then preserve the evidence from the blockchain along with the seized cryptocurrency on the agency-controlled wallet.
Because cryptocurrency can fluctuate wildly in value over time, the authorities should not convert seized cryptocurrency into United States Currency until after a forfeiture order is issued.
This article was last updated on Wednesday, September 16, 2021.