Seizure of bitcoins and cryptocurrencies is becoming commonplace in different jurisdictions, however, prosecutors will need to be careful that the government does not pay dearly in the future.
You may not know the name Christian Langalis, but you certainly know the picture above. Langalis, who became the Bitcoin Sign Guy, was responsible for one of the most popular memes in crypto history. His simple act of holding up a sign that said “Buy Bitcoin” at a Congressional hearing quickly went viral, and has been referenced and parodied countless times since.
Langalis himself has become something of a celebrity in the crypto world. He’s been interviewed by major media outlets, and even had a meet-up held in his honor. All because he held up a sign for a few seconds.
It just goes to show that you never know what will take off in the world of cryptocurrency.
Seizure of bitcoins and cryptocurrencies is becoming commonplace in different jurisdictions, however, prosecutors will need to be careful that the government does not inadvertently infringe on the property rights of innocent investors.
In December 2017, the US Government Accountability Office released a report entitled “Blockchain Technology Overview”. The report addressed various issues related to blockchain technology, including its potential uses, advantages, and challenges. With respect to the latter, the report noted that “blockchain technology is still in its early stages and faces challenges that could impede widespread adoption”. Among these challenges, the report listed “scalability” and “privacy concerns stemming from pseudonymity” as two of the key issues facing blockchain.
A Swedish trafficker had 36 bitcoins seized by the police, now the country’s government has to return US$ 1.6 million to the convict, all this for a simple “mistake” that will cost the government of the European country a lot.
According to The Telegraph website, it all started 2 years ago, when the unidentified man was convicted of drug trafficking. He was arrested and the prosecution insisted on confiscating his 36 bitcoins, at the time valued at US$136,000.
The prosecutor made a simple mistake. During the case, she convinced the judge to confiscate $136,000 from the accused (the full amount of bitcoins). Therefore, the court order was for the seizure of US$ 136,000 in Bitcoin, not 36 bitcoins. What happened is that now, two years later, bitcoin has had its price increased by more than 10 times and the 136,000 represents just 3 bitcoins.
When the dealer was released, authorities were ready to sell the 36 bitcoins seized. But the prosecution’s arguments based on the total price at the time justified the convict’s plea that the state is entitled to only 3 bitcoins of the amount, as the seized coins are now worth much more.
As the prosecution used only the full monetary value, the government had no choice but to return 33 bitcoins to the man who was arrested. As a result, the Swedish government was forced to return just over US$ 1.6 million (R$ 8.6 million), even knowing that the cryptocurrencies are of illicit origin.
The prosecutor in the case lamented the final outcome of the situation, speaking in an interview that the act was “unfortunate in different ways”, but at least it served to teach the authorities the lesson.
“The lesson to be learned from this is that we must maintain the value in Bitcoin, that the proceeds of crime should be 36 Bitcoins, regardless of what the value of Bitcoin was at the time. This led to consequences I couldn’t foresee at the time.”
It is noteworthy that this was the first case of seizure of cryptocurrencies in Swedish history and this explains why so much confusion surrounding the situation. As a result, authorities learn to improve their mechanisms for enforcing the law, even if the first attempt turned out to be much more expensive than expected.