Can the Cops Take Your Crypto? Yep, They Can!
Over the past few years, law enforcement has come upon something new — how to deal with cryptocurrency. These days, some unsavory people out there have amounts of crypto that far outweigh the value of jewelry, cars, homes, and yes, even cash. Last year, alone, in the city of London, England, UK, law enforcement took almost £300 million, approximately $3.9 million US dollars, that was linked to crimes.
In the US, things were similar. Throughout the country, the US Marshals service seized approximately $919 million in 2021, and in February of this year, made a seizure of about $3.6 billion in stolen Bitcoin.
These instances have been rising since 2017. Why? Because crypto, in general, is very attractive to people who don’t like to follow the ways of the law. People believe that since it is unregulated that they can hide it and transfer it much easier than other types of assets like cash or cars. However, this is definitely becoming a challenge for law enforcement.
They Have to Know What to Look For
One of the reasons something like this is so challenging is that many people in law enforcement do not know how to recognize things like a cryptocurrency wallet, nor do they know how to unlock it. If. you know about crypto, you know that you need a private key to do this. Essentially, they have to obtain the key to open the wallet, and if the person who has the key won’t give it up, they could be out of luck.
In France, for instance, a suspected hacker was put through 48 hours of interrogation before he finally gave up and offered the code to his wallet, which ended up hacking around $2 million US dollars in it.
Things have been similar in the US where they have found wallet codes in things like TV instruction manuals and gum wrappers.
Even the FBI is jumping in the crypto crime game, as it just formed a crypto unit to not only help track and prosecute crypto criminals, but to also train others in how to find those who believe they are above the law. Currently, agents are focused on things like virtual currency exchanges, which are used by criminals to hide the funds that they have.
What Happens After Authorities Take Crypto from Criminals?
What happens after the crypto is seized? Traditionally, seized assets like boats, planes, houses, cars, or other items are eventually auctioned off after they no longer are needed for evidence. However, crypto is a bit different. US Marshals auctioned off the cryptocurrencies themselves until 2020, but the buyers of this crypto had to go through a series of background checks. One buyer was able to buy 30,000 Bitcoins in 2014 at $632 each. Today, he still has many of them, and at around $40,000 each, he holds approximately $1.2 billion in crypto.
When things like planes and cars are seized and then sold, the proceeds are actually used to support law enforcement, and with crypto, it’s no different. However, if the items seized created a victim, such as a stolen car, that person gets the proceeds that the auction created. So, if you are hacked, and the government is able to get those Bitcoins back, you will get the proceeds of that.
…but there is a bit of an issue here because of the volatility of these coins. Let’s say, for instance, that you had 100 Bitcoin stolen back in 2018, and now, four years later, they are eligible for return. Do you get the 2018 value of the Bitcoin or the 2022 value? Back in 2018, Bitcoin averaged around $5,500. Today, it is up to $40,000. That’s a huge difference. There is also the question of what happens if the value falls. Let’s say you bought your Bitcoin today, and you own one Bitcoin… that’s around $40,000. It’s stolen by a hacker tomorrow. In the future, let’s say that hacker is caught, and you are eligible to get your Bitcoin back. However, there was a crash, and now one Bitcoin is only worth $25,000. Do you get that amount or should the government cough up the $15,000 to cover the rest of the value?
This is definitely a tricky situation and one that will need to be worked out in the future. Crypto is only set to become more prominent, so stick with us to see how all of this plays out!