Bitcoin Is Decentralised, but Who Controls It After Confiscation?

[hafiztalha]

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.

People always messed up things just because of these imaginary theories about Bitcoin having enough negativity, which did not stop him from pursuing him in the long term. He always needs to understand it's just a currency or unit of exchange, nothing else. People faced too many problems during the use of fiat, but they never gave any accusation because it's just a tool or currency that is used and then faced consequences. The same applies to Bitcoin.

It's never given anything extra to anyone because giving back bitcoins to victims has never been easy because few things always work against this. People using exchanges or other platforms are never able to provide proof of their funds easily, and it's better to give back money to victims because they are facing problems in case they have nothing back.

[Lexandroove]

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.

That's why this discussion matters, as the outcome would influence public trust in legal protections for Bitcoin ownership.

Yes, at this point, I'd agree that confiscation may be justified (as it's mostly as a result of fraudulent activities), but who ultimately benefits from the seized coins is a separate question worth watching...... If what happens behind the scenes is ever unearthed.

[Lexandroove]

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.

People always messed up things just because of these imaginary theories about Bitcoin having enough negativity, which did not stop him from pursuing him in the long term. He always needs to understand it's just a currency or unit of exchange, nothing else. People faced too many problems during the use of fiat, but they never gave any accusation because it's just a tool or currency that is used and then faced consequences. The same applies to Bitcoin.

It's never given anything extra to anyone because giving back bitcoins to victims has never been easy because few things always work against this. People using exchanges or other platforms are never able to provide proof of their funds easily, and it's better to give back money to victims because they are facing problems in case they have nothing back.

It's a tool (just like FIAT) and criminals misusing it doesn't make the asset itself responsible.

The concern isn't about blaming Bitcoin; it's about accountability and what happens to confiscated funds. Returning assets can be difficult when ownership is unclear, but that makes transparent procedures and protecting victims' rights even more important.

How this case is resolved could set a framework for future Bitcoin seizures and determine whether victims or governments ultimately benefit (I personally hope for the former to be the case).

[Webutxo]

That's why this discussion matters, as the outcome would influence public trust in legal protections for Bitcoin ownership.

Yes, at this point, I'd agree that confiscation may be justified (as it's mostly as a result of fraudulent activities), but who ultimately benefits from the seized coins is a separate question worth watching...... If what happens behind the scenes is ever unearthed.

The government institution is like a secret cult, if you are not among them, you will not know how funds are spent and even if you are, there are limits to the ones you will know unless you are very rooted in high position. If government seize Bitcoin and they refuse to reports that they sold Bitcoin and how the money were channel, the public will know nothing and most of the time to avoid sentiments and emotions, they kept the breakdown hidden, the Gernam government did it and nothing was published after.

I think one of the challenge of Bitcoin theft itself is the barrier to identify the real owner of a Bitcoin. The Cold card wallet hack is an example. How do I identify the onwer of the Bitcoin here when the private keys were compromised and many people can access them. It will be impossible to locate people that own such coins. The coins that may be easy are the ones that came from centralized exchanges, like the Mt gox exchange, the wallet is sitting idle for years.

[davis196]

I know that many would likely be in support of such a move, as fraud, especially on digital assets, must be curbed in any way, shape, or form, 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.

True decentralization means nobody having control over the transactions, which are being executed on the blockchain, so that no transaction could ever be stopped and reversed by any person or entity. The fact that some governments are confiscating coins, that were acquired by various scammers and criminals has nothing to do with cryptocurrency decentralization. The government would most likely return the seized coins to the crypto scam victims, after the investigation has been done and the criminals have been convicted. I don't see a problem here. The only problem, which might occur is the governments deciding to keep the seized coins, instead of returning them to the victims and selling them at any given moment(which can cause short term price drops on the crypto markets)

[Catenaccio]

True decentralization means nobody having control over the transactions, which are being executed on the blockchain, so that no transaction could ever be stopped and reversed by any person or entity. The fact that some governments are confiscating coins, that were acquired by various scammers and criminals has nothing to do with cryptocurrency decentralization.

Confiscation with Bitcoin means physically and legally confiscated by law enforcement governmental staffs with court orders, legal orders to do that severe action. After confiscating your bitcoin, for example, those coins will be moved to a new wallet and legal notes on how your coins were confiscated, and how they were moved to a new wallet controlled by the government.

There will be other steps later, that perhaps take a long time, for what to do next and eventually with your seized bitcoins.

Who will control seized bitcoins?
Government for sure but depends on each nation, there will be different governmental authorities that are responsible for this legal action.

[Somegory]

In a centralised world everything as to bow, unfortunately same for Bitcoin, yes It's decentralised but it's not above the law, centralised world has the law and that's what makes them powerful.

Bitcoin on the other hand has no control over such power, the only power Bitcoin gives is your total control over your money, in a Decentralised manner if you can use it in such a way.

Just because Bitcoin is a decentralised digital currency doesn't mean it's a criminal portal where it's decentralisation can cover your crimes, it was the first thought of many criminals who used Bitcoin for comes and they got served hard, they failed to do their own research first.

[Hewlet]

I know that many would likely be in support of such a move, as fraud, especially on digital assets, must be curbed in any way, shape, or form, 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.

Discussions bothering on what happens to a confisticated item after it has been recovered from it abuser has been a strong one and even in cases where hard drugs has been ceased from those caught with it, the average masses usually lack the right information as to what becomes of that drug after those it is take from those using it.

Unfortunately, the lack of accountability on the part of the government will not give us answer to this question because the government are the ones that are in charge of such case. Bitcoin is good and though it is decentralized, if it is used for the wrong purpose that goes against a set out law of a land, the government has every right to cease it. Bitcoin is decentralized to the degree that the law allows it to.

[promise444c5]

I think one of the challenge of Bitcoin theft itself is the barrier to identify the real owner of a Bitcoin. The Cold card wallet hack is an example. How do I identify the onwer of the Bitcoin here when the private keys were compromised and many people can access them. It will be impossible to locate people that own such coins. The coins that may be easy are the ones that came from centralized exchanges, like the Mt gox exchange, the wallet is sitting idle for years.

Source could work for some.. if they can sign a message with key from one of the chain source or get the source to help you sign a message, depending on how they want to handle it. Or you proof how the fund was moved there for example exchange as source  where you got the coin , how you purchased and the likes .

But i doubt a lot of people willl want to do that if the whole process because of privacy even if it’s not a transparent process..

[Luzin]

The government would most likely return the seized coins to the crypto scam victims, after the investigation has been done and the criminals have been convicted. I don't see a problem here. The only problem, which might occur is the governments deciding to keep the seized coins, instead of returning them to the victims and selling them at any given moment(which can cause short term price drops on the crypto markets)

Yes, that's absolutely correct, this situation often leads to misunderstandings. Decentralization is a chain system and it has nothing to do with private keys. How can a confiscator control seized coins without the keys? Remember the saying 'Not your keys, not your coins.' This means that you don't really own your cryptocurrency unless you hold the private key or seed phrase that controls your wallet. So, the confiscator should have the private key or seed phrase from the seizure. Therefore, the owner of the criminal proceeds must be questioned and required to provide the key and seed. So the ones who control the coins are those who have the key or seed. CMIIW

[YOSHIE]

I’d like to hear your take on this.

In fact, if you want to get information about Bitcoins confiscated by law enforcement officers in various countries, it is very easy to get it from various sources.

As we know, even though Bitcoin has the decentralized nature of the blockchain, the transfer does not change the nature of the decentralization, it just changes the first party to the second party.

As the information stated.

Transfer to State-Owned Wallet: When confiscation occurs, investigators will force the perpetrator or hack the storage infrastructure to obtain the old private key. After that, the Bitcoin assets are immediately transferred to a new digital wallet (hardware wallet or institutional cold storage) which is created and locked by a government agency.

We know that the global Bitcoin network basically runs in a decentralized manner, however if we look specifically at all confiscated Bitcoin assets are subject to legal control by the authorities of the country that confiscated them.

[serjent05]

I know that many would likely be in support of such a move, as fraud, especially on digital assets, must be curbed in any way, shape, or form, 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.

In a scenario where Bitcoin is confiscated, it is clear as crystal that those Bitcoin will be controlled by the authority that confiscated it.  After the authority got full control of the confiscated funds, if there are victims that needs reimbursement, the authority will eventually hands out this confiscated Bitcoin to their rightful owners.  That should be how the process goes.

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.

If you are asking about the ownership of the confiscated Bitcoin, then it should be given to the victims.  The government should always consder the verified victim behind the fraud that lead to confiscation of Bitcoin.  I think it is not right to automatically give the ownership to the authority that confiscated it.

[Hamza2424]

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.

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

The UK has asked China to determine whether the victims have ownership rights or not. On the Chinese side, the application has been accepted by a court in Tianjin, and they have opened a six-month period for interested parties so they can join.

Although there are no final statements from either the UK or China so far about whether the UK will return all the coins or whether China will hand over the coins to the rightful owners, if China says they will, then they will most probably return them because a similar case in China recently ended the same way.

Although, as far as I know, the UK has not agreed to anything so far.

[Lida93]

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.

Who confiscates it owns it and in this news it's the government that have seized the bitcoins on the grounds of criminal law broken.  Every jurisdiction has a governing government in charge as an authority and when a crime including those of financial crimes are committed, the proceeds of such crime gets seized by the authority, and bitcoin isn't different regardless that it's not a centralized money it can still be confiscated.

What I always expect when funds are seized by government is that procedures should be put on ground on how those funds can be returned to the victims of the financial fraud and not government keeping it as their property.

[Muba20]

I know that many would likely be in support of such a move, as fraud, especially on digital assets, must be curbed in any way, shape, or form, 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.

Discussions bothering on what happens to a confisticated item after it has been recovered from it abuser has been a strong one and even in cases where hard drugs has been ceased from those caught with it, the average masses usually lack the right information as to what becomes of that drug after those it is take from those using it.

Unfortunately, the lack of accountability on the part of the government will not give us answer to this question because the government are the ones that are in charge of such case. Bitcoin is good and though it is decentralized, if it is used for the wrong purpose that goes against a set out law of a land, the government has every right to cease it. Bitcoin is decentralized to the degree that the law allows it to.

Even if the government has the power to seize any type of asset, it is important to be open to the public about how that asset is being used later. In the case of assets like Bitcoin, the amount seized, whether it has been sold later, these information should be made public. If Bitcoin is seized in the investigation of someone's crime, then the government should return it, confiscate it, or present any situation to the public according to the court's decision. But if what is actually happening behind these decisions is not revealed to the public, if people cannot know, then people's trust in the government system can be greatly reduced.

Bitcoin's decentralized system limits the government's control over transactions by any single institution, but this does not mean that users are completely free from the laws of the country. Therefore, as important as the independence of Bitcoin is, fairness and accountability in law enforcement are also important. It is important to ensure that the government's power is not only to seize assets, but also to ensure that they are used appropriately.

[henmark]

I think one of the challenge of Bitcoin theft itself is the barrier to identify the real owner of a Bitcoin. The Cold card wallet hack is an example. How do I identify the onwer of the Bitcoin here when the private keys were compromised and many people can access them. It will be impossible to locate people that own such coins. The coins that may be easy are the ones that came from centralized exchanges, like the Mt gox exchange, the wallet is sitting idle for years.

Source could work for some.. if they can sign a message with key from one of the chain source or get the source to help you sign a message, depending on how they want to handle it. Or you proof how the fund was moved there for example exchange as source  where you got the coin , how you purchased and the likes .

But i doubt a lot of people willl want to do that if the whole process because of privacy even if it’s not a transparent process..

No matter how much you try, there will always be doubts about it; that is the real problem. Nobody says that you can't do something; you can, but the question of "is he the real owner, or did he find a way to do that too?" will remain, and that is the real issue. I understand this may not be all that simple and easy, but we need to realise that things are not really that simple in nature. I get that it is very tough to make this, and I get that there are methods you can come up with, but the doubt will always be there.

[Z_MBFM]

Every country has its own legal system and it has laws for all sectors, so when someone does something illegal, it will be handled according to the procedure of that time and place. Maybe the person from whom the Bitcoins were seized will be given some Bitcoins back and the government will take the rest under its own control. Or maybe the government will take the entire fund under its own control and someone will give money to those who have been affected and the rest will work for the development of the country. Since Bitcoin is decentralized, the government will not have any say in the call of those Bitcoins, only those who get the wallet key can do all the transactions.

[promise444c5]

~snip

No matter how much you try, there will always be doubts about it; that is the real problem. Nobody says that you can't do something; you can, but the question of "is he the real owner, or did he find a way to do that too?" will remain, and that is the real issue.

That’s why i mentioned : “depending on how they want to handle it” but i didn’t even realise a big flaw from one the approach.. which is the signing.

Any signer can’t be trusted , it could come from any source and the source can claim the money without the need of pairing with a non owner.  The only one that works is KYC,  if the owner can prove the money is theirs from a centralized exchange or any Centralized service where they purchase it. Only cases of someone acting as vendor for an external buyer will become complicated if the real buyer doesn’t have a solid evidence.

In short, it’s just a possibility but for it to work, heavy KYC details will be needed somehow.. either way, it looks like a terrible idea entirely. [forget I mentioned it  ]

[sunsilk]

Every country has its own legal system and it has laws for all sectors, so when someone does something illegal, it will be handled according to the procedure of that time and place. Maybe the person from whom the Bitcoins were seized will be given some Bitcoins back and the government will take the rest under its own control. Or maybe the government will take the entire fund under its own control and someone will give money to those who have been affected and the rest will work for the development of the country. Since Bitcoin is decentralized, the government will not have any say in the call of those Bitcoins, only those who get the wallet key can do all the transactions.

If the government has proven that those seized bitcoins came from illegal activities, I don't think that they'll give even a tiny amount of it.

Most assets and things that came from illegal will never go back to its former and original owner.

The government will take it and that's why we've seen some of it in the past that were put in an auction by the US government. They take the entire thing unless those funds have claimant from the victims and the rightful owners.

So, it depends on the situation and the dispute too but there's a guarantee that if it's proven to be dirty funds, you know who takes it all.

[Hazink]

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

Some mistake decentralization to total anonymity, and they also think it's not traceable not to talk about how easy it can be to take over access from hackers or who ever holds the coin when they have been captured by the government, so the top question or confusion is really not a big deal, once a criminal is arrested their asset get seized and moved to where the government have total control over.