What happens to confiscated crypto. The entire cycle from confiscation to distribution.

The rule “what is not illegal is legal” works when you are absolutely sure that you are not breaking any laws. But one step aside and you will go to jail for financial crime and all you cryptocurrency will be confiscated. And be sure, the government already knows what to do with each of your Satoshi.

Is that actually legal to confiscate crypto?

At first, I have to note that nobody will seize your cryptocurrency just because it’s not fiat. Don’t worry, nobody will take away your 0.0003 btc. The government forfeit crypto if it was made by illegal hustles: money laundering, drugs and weapons purchase, remuneration for a crime etc.

There is no accurate data on how much cryptocurrency was confiscated so far. However, according to an open source, the funds from sale are close to 1 billion dollars.

The first huge crypto seize was made in 2013. U.S. Government confiscated 144,000 BTC from Ross Ulbricht, Silk Road founder. At the moment, the U.S. government was one of the major BTC holders (suck it, Winklevosses).

There are more than 453,000 confiscated coins. And what is even more surprises me, the 85.6% of this sum are to Silk Road and SELEC.

Where do they keep it?

Chances are the confiscated crypto is stored on separate servers and cold wallets, but there is not so much information on this field. For example, Finnish government keeps crypto on cold wallets and considers it as assets.

The U.S. government is looking for a vendor that will do all the accounting, auditing, wallets creating and the other dirty work that nobody else wants to do. Joking, a vendor should take serious responsibilities. He should have all the possibilities to work without any time frames and coin amounts limitations.

There is no any valid information about confiscated crypto storage in the other countries. However, we know about the auctions outside the U.S.

Couple of words about auctions

As we found out, government sells seized crypto on auctions. The first legal body started selling crypto on auctions was the U.S. Marshals service (USMS) and the U.S. Department of Justice. The US follows, such countries as Germany, U.K., South Korea, Israel, Italy, Australia, Bulgaria, Finland and Spain.

What is more, Wilson Auctions, the major auction company in Great Britain and Ireland suggests “government and law enforcement agencies around the world a safe solution to the ever growing problem of captured cryptocurrency” to GB, Ireland, Belgium, Malta, Balkan countries, Nigeria and Malaysia. In March 2019, the Wilson Auctions attracted participants from 110 countries that have purchased coins valued $420,000.

Where all these money go?

The revenue from selling crypto goes to public authorities that helps to control crimes. Another part of this income goes to the ones who are victims of crimes. Which is a good thing to do.

However, I have to admit that sometimes actions of the authorities are not so transparent as we want it to be. For example, U.S. government report details about coins confiscations on Ministry of Justice website. However, there is a lot of time passes between the date of withdrawal and the date when the document appears on the website. What is more, the reports are not archived on the Internet: when a new report appears, the previous one is being deleted. So we can’t trace how much of crypto was confiscated and sold. All we can do is to follow this information on the open source.

Moral

There will be no moral. I’m not a preacher. I just hope that all of these scammers will be catched one day.