Crypto seizure and forfeiture

Authorities seize crypto by obtaining the private keys from suspects' devices or backups, by ordering exchanges and custodians to freeze and hand over accounts, or by asking stablecoin issuers to freeze tokens at specific addresses. Seized assets are usually moved to government-controlled wallets or held by specialised custodians while the case proceeds. Forfeiture, decided by a court, makes the state the legal owner.

Governments have become significant holders this way. The US has auctioned or sold seized bitcoin many times since the Silk Road case, and in 2025 created a Strategic Bitcoin Reserve funded with forfeited BTC instead of selling it. Germany sold around 50,000 BTC seized in a piracy case in 2024, and the UK holds a large amount of bitcoin seized in a fraud investigation. Large on-chain movements from government wallets are watched closely by markets.

Victims of hacks and scams may be entitled to restitution from seized funds, which can take years and sometimes conflicts with the government's wish to keep the assets.