The hacker was convicted in April 2014 for computer fraud, among other charges. He allegedly covertly installed software on other people’s computers to mine bitcoin, which he kept for himself. He was sentenced to more than two years in prison.
Authorities “seized” more than 1,800 bitcoins from the alleged hacker and were able to sell 86 for the equivalent of about $600,000. However, they were unable to access the rest of the coins because they were protected by multiple passwords. The hacker reportedly refused to hand over the passwords to authorities and has maintained his silence as he serves his prison sentence. At today’s market price, the stash is valued at over $65 million. But without the passwords, the coins may never be accessed by authorities.
Germany isn’t the only country seizing cryptocurrencies from alleged criminals; in the U.S., authorities recently filed a civil complaint to forfeit bitcoins worth over $1 billion seized by law enforcement on November 3, 2020. The seizure was the largest involving cryptocurrency in the history of the Department of Justice.
According to the civil forfeiture complaint, the seized bitcoins are tied to the Silk Road, an online marketplace where drug dealers purportedly sold hundreds of kilograms of illegal drugs as well as other unlawful goods and services to over 100,000 buyers across the globe. The Silk Road was shut down in 2013. Its creator was convicted in 2015 of seven criminal counts, including money laundering and conspiracy to distribute narcotics.
The complaint claims in 2020, IRS agents were able to analyze bitcoin transactions that were reportedly executed by Silk Road. They identified 54 previously undetected transactions that represent bitcoins stolen from Silk Road in 2012 and 2013. They traced those transactions to an unidentified individual and were able to seize several thousand bitcoins on November 3, 2020, valued at over $1 billion. It is unclear if the individual will be charged for any wrongdoing.
Unlike their German counterparts, the U.S. authorities appear to have access to all the bitcoins and will likely auction them off if the civil forfeiture complaint is approved in court. A large percentage of forfeiture proceeds is often absorbed into law enforcement budgets. Critics of the process argue that this creates an incentive for law enforcement to “police for profit” and conduct unnecessary seizures.
Civil asset forfeiture is controversial because law enforcement agencies can use it to seize property with alleged ties to criminal activity, even if the property owner has not been charged. While the value of assets seized in the bitcoin case is significant, a majority of these types of seizures involve property (cash, vehicles, jewelry, etc.) with a much smaller value. Forfeiture can happen to anyone, and when it does, a property owner will need assistance from an attorney.
Nationwide Federal Civil Asset Forfeiture Attorney
Has law enforcement taken away your property using civil asset forfeiture? Contact Brian Silber, P.A. to set up a free initial consultation and get assistance from a nationwide federal civil asset forfeiture attorney.