The police can take action on cryptocurrency that they suspect is linked to the proceeds of crime, such as dealing in illegal drugs, carrying out a fraud, or activity linked to terrorism.
They can:
· Seize it
· Freeze it
· Destroy it
· Forfeit it
There are tactical advisers stationed in police departments nationwide to help investigate and seize digital assets tied to crime.
Seize and Freeze
Once the police have legally obtained a warrant from the High Court, they can seize a cryptocurrency wallet. With a Property Freezing Order, they can stop the original owner from accessing the cryptocurrency, and transfer it into a wallet controlled by law enforcement agencies.
However, some crypto wallets are encrypted, so access is restricted. The way the police handle this issue is to get a Court order which compels the suspect to disclose the passkey. If the suspect doesn’t comply with the order, they could face a longer prison sentence.
The police have the power to seize passwords if they’re available physically. It might be the case that passwords are stored on memory sticks, which the police are able to take if they will help the investigation.
Destroying the cryptocurrency
The police now have the power to destroy crypto assets if returning it to circulation is ‘not conducive to the public good.’
What that means is a bit open-ended at the moment. Perhaps types of privacy coins may be captured by this, because they grant the owner a very high degree of anonymity.
Forfeiture
In other cases, the cryptocurrency is forfeited, after it is seized. The authorities will try to give the cryptocurrency back to victims, if it was taken as part of a scam. Once all of the victims have been compensated, and any other ownership issues have been addressed, the funds are auctioned for normal ‘fiat’ currency.
That money is then given to the agencies that participated in the case, and earmarked for funds or projects. That might be; funds to compensate victims of fraud, public housing projects, or job skills training, for example.
Recent new powers
In April 2024, the National Crime Agency and the Police were granted new powers to deal with crypto-assets[KH1].
Perhaps the most notable change is that they no longer have to wait for an arrest before they seize assets. This speeds up the process so that criminals do not have time to pre-empt the seizure and relocate the assets.
The new powers also help victims of fraud, who have lost cryptocurrency to some form of scam. Victims can now apply for the money held in a crypto account to be released to them.
How the police find the criminals
Of course, the Police need to track down the owners of the crypto wallets to enforce sanctions against them, and to trace where cryptocurrency has been deposited.
They use blockchain analysis tools to determine the nature, origin and destination of funds. With that information they can find out which exchanges the assets are deposited into, and whether they are connected to unlawful activity.
Lawyers for cryptocurrency issues
If you’ve been involved in the seizure of cryptocurrency, please get in touch. We can help you navigate the process and get the best result for you. Call us on 0333 344 8377 for an initial consultation.
If you’d like any more information on Blockchain, Smart Contracts, Crypto Seizure , or generally, please give us a call at Harewood Law. We are based in Leeds, and cover Bradford, Halifax, Wakefield, Huddersfield, Keighley and across West Yorkshire and the UK.
Harewood Law regularly instruct leading experts in this area and we can assist, guide and advise on the type of expert that is most relevant in your particular circ*mstance. Please contact our team today on 0333 3448377 or email us on [email protected] and we will be more than happy to assist.
