In what is being called the first “high-value restraint of cryptocurrency” in New Zealand, law enforcement agents have reportedly seized millions of dollars in cryptocurrency from an alleged movie pirate.

Authorities in New Zealand have seized nearly NZ$7 million [US$4.5 million] worth of Bitcoin and altcoins, as well as $1.1 million in fiat currency, from Hamilton resident Jaron David McIvor.

The 31-year old software developer is accused of operating a streaming service in the United States that illegally distributed “pirated” movies through which he reportedly earned millions of dollars.

In addition to McIver, individuals “linked to the website” in the United States, Canada, and Vietnam are also under investigation.

An unnamed relative, with whom McIver resides, has also been caught up in the case. Restraining orders were issued against the relative just a few weeks ago, though it is unclear what his or her role in the crime may have been.

To catch a movie pirate

McIver lives in a modest rental home that he shares with the abovementioned relative. There are no flashy expensive cars or other obvious signs of wealth, so how did he get caught?

According to a press release published by the New Zealand Police, the U.S. Internal Revenue Service (IRS) alerted authorities to a website that was allegedly distributing “a large number of copyrighted films” being operated by a man living in New Zealand.

The IRS had received a “Suspicious Activity Reports” from PayPal, which tax officials were able to trace back to McIvor.

Despite crackdowns on digital piracy over the past several years, the illegal distribution of copyrighted movies and TV shows continues to rise, and the damages incurred in terms of lost revenue are staggering.

In 2018 alone, more than $31.8 billion was lost to piracy, according to the latest report from Digital TV Research.

That figure marks a 374% increase from the $6.1 billion lost in 2010 but pales in comparison to the $52 billion expected to be lost in 2022.

Accused of Money Laundering

In addition to copyright infringement, McIvor is also being accused of money laundering.

Since copyright infringement is a crime in the United States as well, any profits obtained as a result are illegally obtained.

“Introducing illicitly-obtained funds into New Zealand constitutes money laundering and police will thoroughly investigate and restrain the assets of those who undertake such activity, regardless of where in the world the crime is committed,” explained Chief Kay.

Though this is not the first time that cryptocurrency is being seized by the NZ authorities, sources say the McIvor incident is the first ‘high-value” seizure of virtual currencies in the region to date.

McIvor has not been actually been criminally charged with money laundering and his lawyer, Truc Tran, said that he is denying the allegations.

McIvor’s cryptos to be sold

McIvor’s cryptocurrency and fiat assets were seized in accordance with the Criminal Proceeds Recovery Act which was enacted in 2009.

The Act replaces the Proceeds of Crimes Act of 1991 and gives the Crown the authority to confiscate property and to seize funds generated from significant illicit activities, “sometimes without the need for a criminal conviction.”

Whether or not all or a portion of the seized assets are forfeited to the Crown will ultimately be decided by a High Court judge.

Regardless, due to the extremely volatile nature of Bitcoin and other cryptocurrencies, the crypto assets seized from McIvor will be sold “by order of the High Court”.

The proceeds will be held by the Official Assignee for safekeeping until the High Court renders its decision on whether or not the assets should be forfeited.