Bitcoin Is Decentralised, but Who Controls It After Confiscation?

[EL MOHA]

We have not seen any instance of seized coins being returned to the rightful owners, it has always been the governmemts who delight in keeping them. This has nothing to do with the decentralized nature of Bitcoin, but more of confiscation of properties that we see even with fiats and even physical properties.

No there are actually instances where there have been return of confiscated or seized assets been returned but it depends on what lead to the seizure. In this particular story by the OP there is a great chance of return to the victims since it’s a fraud case, the only concern why OP brought it here is whether the victims will get fiat or its bitcoin equivalent. But I am confident it will be fiat because we all know how the government stands on bitcoin and cryptocurrency is in certain countries like China.

I don’t understand why OP has dragged bitcoin decentralization into this discussion because it’s certainly not about it, they didn’t confiscate the coins by using a central power to freeze their wallet like with fiat and banks rather it’s the victims that surrender the coins and this doesn’t have any effect on bitcoin decentralization

[HelliumZ]

Many Bitcoins have been confiscated in the past and the government has taken control of all Bitcoins. Till date, there is no known case of any confiscated Bitcoin being returned to the person who confiscated it. However if there is a legal battle and the person who confiscated it wins the battle, then the government may be able to return the Bitcoin to him. But I do not know of any history of any person winning against the government's seizure case. However, as far as I know, China has kept all the Bitcoins it has confiscated so far with the Chinese government. Similarly, the US government controls all the Bitcoins it has confiscated in the United States. Just like in all the countries in the world, the government has controlled all the Bitcoins that have been confiscated in this matter.

[Mrbluntzy]

But China is hostile to bitcoin. There is probability that China may not send the coin to the owners. I think we should wait and see what will happen if UK send China the coin.

I don't even opinion that China should get that money, they were not able to catch and stop the scammer but instead another jurisdiction succeeded to do so of which if they had not, the scammer will be walking freely today undetected and still spending what they have stolen. Let the victims who can prove that they were really victims of that scam be compensated and the balance can be kept by the UK government for their efforts put in place to apprehend the culprit.

It's just like one scam case that happened in my country, a lot of people lost their money to that ponzi scheme investment because it looked so authentic, when the company started facing some challenges and refusing to pay investors, some people were reporting them but our government didn't do anything to stop this company when they had the opportunity to,  meanwhile they were the ones that gave the company an operating license but after the whole thing busted, the CEO flee the country still under the watch of the government. If it had turned out like this current case, I won't agree that our government should receive thar money.

[ColdLava40]

I’d like to hear your take on this.

The government, of course, gains control of the coins once they are confiscated.

The way Bitcoin works remains the same, whether the coins are stolen or seized by the authorities. Whoever controls the private keys can move or spend the coins as they choose.

In a way, we all wish that when the government or authorities recover stolen coins, they would return them to their rightful owners. I  have rarely seen this happen. Instead, the coins usually remain in the government's possession.

We should also consider the many victims who have lost their money. It can be almost impossible to trace every victim and identify the rightful owners, making it difficult to return all the recovered coins to them.

[Charles-Tim]

I don't even opinion that China should get that money, they were not able to catch and stop the scammer but instead another jurisdiction succeeded to do so of which if they had not, the scammer will be walking freely today undetected and still spending what they have stolen. Let the victims who can prove that they were really victims of that scam be compensated and the balance can be kept by the UK government for their efforts put in place to apprehend the culprit.

China can do the compensation. It is China that is requesting United Kingdom to send them the money. United Kingdom supposed to respect that and send China the money if they promise to send the money to the victims. Definitely not all the money will be sent to the victims because some victims will not know they are among the people that were scammed by the woman and some will not have the address they send from anymore which Chinese government will profit from. If China did not requestfor it, it could have been different.

[coinlary]

but in my opinion, the biggest long-term implication is that this case could become a major test of who ultimately controls seized Bitcoin: the victims of the fraud, the government pursuing confiscation, or the jurisdiction holding the assets.

Anyone that have the key to spend it and if the criminal doesn’t give it up till he dies, then it becomes lost forever unles someone else do have access to it.

That’s not an implication, and it is not complicated. When someone is arrested they will be forced to give up the keys holdimg the Bitcoins. So if you're asking who should get the keys, then that's another another topic which should be left to the parties involved to handle it, the person who gave it up wouldn't have a say obviously.

What direction would y’all prefer that the pendulum swung towards? Especially at this time, when the demand for self-custody is at a significant high.

I’d like to hear your take on this.

What direction? You want the criminal to keep the keys?

[retreat]

This topic has already been discussed here: 61,000 Seized BTC: Who Deserves the Billions in Gains?, so you should be able to see people’s views on this case from that discussion.

And by the way, you need to edit this: "China’s confiscation of 61,800 BTC", because China never confiscated anything. It was the UK government that seized the Bitcoin from a Chinese suspect who had fled to their country.

And the latest update states that Chinese prosecutors have recently filed a claim seeking not only the 61,800 Bitcoin, but also Bitcoin Cash, Bitcoin Gold, Bitcoin SV, XRP, Dogecoin, cash, jewellery, bank balances and investment portfolios purchased with the proceeds of the fraud.
https://finance.yahoo.com/markets/crypto/articles/china-wants-61-800-bitcoin-191000631.html

So this is likely to become a dispute between China and the UK, as both countries feel they have the right to claim the Bitcoin.

[Die_empty]

The government certainly controls it after confiscation. The UK government has it. UK said China will know what that will be done with it. I expected China to give the coins back to the owners so far it can be sent back to the address that sent the coin to the scammer or if the victim can prove the ownership of their addressees.

But China is hostile to bitcoin. There is probability that China may not send the coin to the owners. I think we should wait and see what will happen if UK send China the coin.

It is worth knowing that the case is still in UK.

Some of the victims invested in this scam with fiat. Those who used crypto to transfer the money invested might not have access to the wallet they used between 2014 and 2017. It would be better for the victims to provide wallet addresses they can access.

China is an authoritarian nation where citizens don't enjoy freedom. I am afraid that the victims of this scam might not get a fair deal if the Chinese government is given custody of the confiscated funds. Maybe the UK government should appoint a third party that would handle the repayments.

[Alphakilo]

I don't even opinion that China should get that money, they were not able to catch and stop the scammer but instead another jurisdiction succeeded to do so of which if they had not, the scammer will be walking freely today undetected and still spending what they have stolen. Let the victims who can prove that they were really victims of that scam be compensated and the balance can be kept by the UK government for their efforts put in place to apprehend the culprit.

China can do the compensation. It is China that is requesting United Kingdom to send them the money. United Kingdom supposed to respect that and send China the money if they promise to send the money to the victims. Definitely not all the money will be sent to the victims because some victims will not know they are among the people that were scammed by the woman and some will not have the address they send from anymore which Chinese government will profit from. If China did not requestfor it, it could have been different.

Am sure we may sometime in the future see the Chinese government have their own cryptocurrency reserve bank just like the U.S ,just to keep confiscated coins because that's what it's looking like and more coins will be confiscated even if the UK releases this ones to them or not or a refund is made to the victims or not.
Everyone including countries want to own crypto currency since they can't control it, because I think the world economy is coming into accepting crypto currency and this is a better way to own more than just buying and accumulating it.

[Findingnemo]

Government haves the control after seizing them, but returning to the victims of the scam don't happen all the time, sometimes it can take years or they never return at all which isn't a reason to question the self custody because even if you have a central authority for bitcoin then it is going to be the government and they have the final say in it, so it is better to be decentralized and people learn to be aware of avoiding the scams.

[KingsDen]

Op, there is obviously jurisdictions among governments. Your news is not that clear... Which government confiscated the bitcoin? Chinese or British government?

Any government who prosecutes within its jurisdiction controls the confiscated bitcoin. But in my opinion, proven victims of frauds need to receive their funds back when scammers are caught and not for government to convert same as a reserve.

If there's an adequate proof of ownership, it is expected to return the bitcoin to the real owners. But that also might be so complicated to achieve.

[PrivacyG]

A direct answer to your question would be 'who ever has the key'.

Why does it matter for BITCOIN who controls what was seized?  Ideally it should work just like any other Asset that is seized.  There is what I would like when it comes to control of my own money, and then there is what normally should happen when fraud money is seized by authorities.  That is their plan, their frame work and it has no thing to do with Bitcoin.

[Floxynice]

I’d like to hear your take on this.

The government may not be able to recover the full amount from the scammers, and confiscating the funds is part of the legal process. Decisions can be made later on to compensate the victims. The government has no right to permanently confiscate the coins and refuse to return them, most of the victims invested a significant part of their life savings, it's only unfair if the government holds on to it.

Never heard that any of the victims were compensated. Like the USA, its Strategic Bitcoin Reserve came from confiscated bitcoins, which I read that the government obtained legal forfeiture of. Why not give the bitcoins back to the victims or allow them to sell the bitcoins back to the government so the government can also use the opportunity to invest in Bitcoin, as they have always wanted to? If any compensation was given, it should have been in the news. Every time we applaud the government for investing confiscated bitcoins, we do not ask how the victims feel about it.

[nullius]

Bitcoin maybe decentralized but if a crime is committed against any country or under there law they can confiscate the stolen Bitcoin when the lay their hands on it.

LOL, how will they lay their hands on it?  A bitcoin is intangible.  The law of “not your keys, not your coins” is superior to every country’s law—and it is a double-edged sword.  If the state does not have the keys, the coins are not theirs, no matter what any official says about it.

When bitcoins are “seized”, it means either they were on a CEX, or the cops somehow obtained access to the private keys.  However, there is no guarantee that they can.

The state’s only power is violence, the power of dumb brutes...

...but that violence can only be directed against a human.  Not against mathematics.  If the human cannot be located, or if the human adequately resists the violence, then the violence is impotent; moreover, in some jurisdictions, there may be legal limits on coercion.

I shake my head whenever I hear about bitcoins being “seized”.  The same applies to Tor dot-onion domains.  If the owner is both competent, and deadly serious about preventing seizure, then the cops never can seize it, no matter what; they may as well reach up into the sky and seize the moon and the stars.

Bitcoin is decentralized but is not above the law and any crime caught using Bitcoin will face the normal judiciary procedures.

State violence is not above the laws of mathematics.


Sometimes, I wish that Bitcoin would not have any mass-adoption.  The masses can’t wrap their heads around the concept that cryptography is immune to state violence; they use KYC CEX on the one hand, and on the other, they mouth virtuous platitudes about the sanctity of human laws.

Dare you imagine a scenario in which the state is powerless?

[Japinat]

The government certainly controls it after confiscation. The UK government has it. UK said China will know what that will be done with it. I expected China to give the coins back to the owners so far it can be sent back to the address that sent the coin to the scammer or if the victim can prove the ownership of their addressees.

But China is hostile to bitcoin. There is probability that China may not send the coin to the owners. I think we should wait and see what will happen if UK send China the coin.

It is worth knowing that the case is still in UK.

If China won't send bank the coins to the real owners, that would be another issue, but we all know how China is being greedy when it comes to bitcoin. They may send only a partial amount but never the full amount. Or most likely, since its the Chinese law that dictates the return process, the victims will no longer receive their bitcoin but will be compensated based on the equivalent of bitcoin to their fiat. In the end, its the Chinese government that will benefit the future massive profits of bitcoin.

[OcTradism]

If China won't send bank the coins to the real owners, that would be another issue, but we all know how China is being greedy when it comes to bitcoin. They may send only a partial amount but never the full amount. Or most likely, since its the Chinese law that dictates the return process, the victims will no longer receive their bitcoin but will be compensated based on the equivalent of bitcoin to their fiat. In the end, its the Chinese government that will benefit the future massive profits of bitcoin.

Chinese government are very greedy and brutal so they have tried to maximize exploitation on citizens so far with their regime existence. It's very unrealistic to think that the Chinese government will treat their citizens fairly, and it's hopeless that they will distribute seized bitcoins to victims as it should be. You can be one of victims but living in a nation like China, if you are not careful with your decision, then action against the government, you will be imprisoned.

It's risky to do that in China, especially with things that are valuable in view and assessment of the government, they will not easily let it go back to you. Big or small amount of bitcoin you lost, you must be superb carefully with any action related to the government there.

[Darker45]

This seems mixed up, kind of misleading.

The decentralization of Bitcoin doesn't have anything to do with the ownership and control of coins. Bitcoin, the system, is run without a central authority or server or headquarter. Bitcoin, the coin, is fully owned and controlled by whoever holds the key. Confiscation of the latter, of the currency, doesn't give any power or authority over a decentralized system. What's under full control are only the coins.

For me, seized coins that are gained from fraudulent means should be fully returned to their rightful owners, the victims.

[Questat]

For me, seized coins that are gained from fraudulent means should be fully returned to their rightful owners, the victims.

We have the same sentiment here, but in this case it's the greediness of the government that is prevailing. the debate now is over who will own the seized bitcoin, China where the crime was originally committed, or the UK where the bitcoin was seized, and the UK's claim is that the scammers used it for money laundering which under their law gives them the right to claim it. 

[Lexandroove]

Of course, Bitcoin doesn't put anyone above the law, and criminals should face justice, but the distinction is that decentralisation makes Bitcoin harder to seize through the network itself; authorities still need access to private keys, cooperation, or a custodial intermediary to move the funds.

I feel like you are overthinking the situation. Bitcoin is just a tool the criminals used. They might as well have used something else like cash. The authorities would need access to the hiding place of that cash and they had to force the arrested culprits to reveal it. It's the same with bitcoin. They arrest them and force them to give up the stolen funds.

That's where the worrying question arise: Should they be returned to victims, retained by the state, or handled through another legal process? Due process and protecting victims' rights should remain central, regardless of the asset involved

Same here. Should the seized assets (cash, goods, properties, etc.) be returned to the victims or something else? The legal system is clear on this in most countries as far as I know. They file everything and process all the claims made by the victims and return the assets to them regardless of what they are.

It's true that Bitcoin is simply the tool used to move or store the proceeds of the crime. My point isn't that Bitcoin should be treated differently from cash, but that confiscating stolen assets and deciding who ultimately gets them are separate issues.

Recovering the funds is only part of the process, but whether they go back to the victims or become state property is where the debate lies.

[The Founding Titan]

The government certainly controls it after confiscation. The UK government has it. UK said China will know what that will be done with it. I expected China to give the coins back to the owners so far it can be sent back to the address that sent the coin to the scammer or if the victim can prove the ownership of their addressees.

But China is hostile to bitcoin. There is probability that China may not send the coin to the owners. I think we should wait and see what will happen if UK send China the coin.

It is worth knowing that the case is still in UK.

So at the moment the UK government control all confiscated coins until they get handed over to the Chinese authorities then it will be in their control and I'm expecting them to deal with it according to their laws and regulations, it would be nice if it was given back to the owners though it's still very likely that they will just keep holding on to it with no plans for it till maybe sometime in the future when/if they country's treatment of bitcoin improves.