FBI Seizes Millions in Non-Bitcoin Cryptocurrency in Second Quarter of 2023

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FBI Seizes Millions in Non-Bitcoin Cryptocurrency in Second Quarter of 2023

On August 23, 2023, Forfeiture.gov, the U.S. Department of Justice's forfeiture notification website, posted second quarter seizures by the Federal Bureau of Investigation (FBI). According to the site, the FBI seized millions of dollars in cryptocurrency, the majority of which was in ETH and Ethereum-based Layer 2 assets and stablecoins.

The crypto seizures came from all over the country, including multiple districts within Florida, California, Virginia, Arizona, Illinois, Ohio, Georgia, Massachusetts, and New York. The FBI seized myriad assets including Ether (ETH), Tether (USDT), DAI, Dogecoin (DOGE), DYDX, Monero (XMR), Solana (SOL), Cardano (ADA), Synthetix Network Token (SYX), Binance Coin (BNB), and Bitcoin (BTC). The Bureau, in many cases, seized multiple assets in one case demonstrating the need for cross-chain and multi-asset investigations.

Investigators used multiple seizure mechanisms for the actions, though a majority of seizures seemed to rely on the civil money laundering seizure statute, 18 U.S.C. 981(a), which allows the government to seize assets by demonstrating probable cause that the assets are involved in a money laundering-style transaction or are proceeds of another federal crime.

In March 2022, the FBI formed the Virtual Assets Unit (VAU) aimed at addressing the use of cryptocurrency for illicit purposes. "The FBI’s new Virtual Assets Unit is the result of collaboration, hard work, and strategic vision from FBI employees who came together to establish a virtual currency center of excellence in the FBI," said Brian C. Turner, Executive Assistant Director of the FBI’s Criminal, Cyber, Response, and Services Branch, in a release announcing the creation of the VAU. "The FBI has a long history of using virtual currency to track criminals profiting from ransomware, soliciting murders-for-hire, and raising funds for terrorist organizations," Turner continued, "The VAU will integrate experts across the organization to leverage the outstanding work being done every day."

The FBI has long recognized the evolving nature of illicit crypto transactions from Bitcoin only in the early days of crypto to an ecosystem where several different blockchains and dozens of different assets can be used in the same case.

The under-the-radar report is significant for a number of key reasons:

  • It highlights the evolving threat from illicit actors who have moved from Bitcoin to myriad assets and blockchains;
  • It highlights the work of the FBI in districts across the country - kudos to the Middle District of Florida - and the success of the FBI's 18-month old Virtual Asset Unit;
  • Finally, the reports shines a light on the growing need to understand asset seizure in the digital world. The use of blockings, seizure warrants, asset custody and auction are little known tools that federal prosecutors are using more and more.

For much more on best practices for digital asset seizure check out TRM Labs blog on the topic here

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