Bitcoin Is Decentralised, but Who Controls It After Confiscation?

[The Cryptovator]

In simple words, whoever has the private keys or seed phrase of the wallet will control it. It doesn’t affect the Bitcoin decentralisation anyway. If the China rules allowed Bitcoin refunds to the victim, then it would happen. But since China banned Bitcoin, I don’t think victims will get their Bitcoin back.

For my country, Bitcoin would be ended in the central bank’s custody after the court decided. At the very beginning, low-enforcement agencies would take over Bitcoin from the criminals; it would remain in their custody until the court decides about the seized Bitcoins. I am saying this based on our native rules. Because Bitcoin is also banned in my country, like China. This is the possible scenario.

[Abuobyda218]

Bitcoin is decentralized, but in some cases, even if Bitcoin is confiscated, the control system over Bitcoin will be in the hands of the country's government.
For example, the Chinese government and the United States are controlling the amount of Bitcoin that they have confiscated from fraudsters. The Chinese government itself did not purchase Bitcoin, but the Chinese government is in the second position in officially holding Bitcoin, meaning it was confiscated from fraudsters and the fraudsters could not win the case, so the government must control the Bitcoin confiscated from them. Similarly, the government of that country controls the Bitcoin confiscated in different countries. If the government can win the case while it is in control, then maybe later it can be returned to the person who had the Bitcoin personally.

[Abiky]

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.

Only if the Bitcoin is stored on a centralized exchange or custodial wallet. Governments simply can't confiscate non-custodial Bitcoin. The criminal would be smart enough to store his BTC on a non-custodial wallet hidden from plain sight. He'll be able to recover the coins after he completes his sentence (if caught). Depending on how long that sentence is. Because if it's a lifetime sentence, then the criminal won't be access it for good.

Even though Bitcoin is decentralized, that doesn't give you the right to do anything with it (as in doing anything "illegal"). There are rules/laws for a reason. And we must respect them. Fortunately, Bitcoin's transparent design, allows authorities to track down criminal activities on-chain. It's more of a feature than a bug to me. For the true privacy paranoid, Monero and similar coins would be the ideal choice. Abide by the laws imposed by the government, and you'll have nothing to worry about.

[Pablo-wood]

Bitcoin is decentralized, but in some cases, even if Bitcoin is confiscated, the control system over Bitcoin will be in the hands of the country's government.
For example, the Chinese government and the United States are controlling the amount of Bitcoin that they have confiscated from fraudsters. The Chinese government itself did not purchase Bitcoin, but the Chinese government is in the second position in officially holding Bitcoin, meaning it was confiscated from fraudsters and the fraudsters could not win the case, so the government must control the Bitcoin confiscated from them. Similarly, the government of that country controls the Bitcoin confiscated in different countries. If the government can win the case while it is in control, then maybe later it can be returned to the person who had the Bitcoin personally.

I think most of the confiscated bitcoins are from centralized exchanges and not from non-custodial wallet where the user has full control over. I know the chinese government and the US can trace transactions down to exchanges and uncover hidden behind wallets they intend to confiscate but as a bitcoin hodler who uses new wallet address for every transaction it might make tracking more difficult especially if we try our very best to avoid CEX. Its hard to recover confiscated bitcoins. In most case government use those funds for national projects or reserves.

[lombok]

I think most of the confiscated bitcoins are from centralized exchanges and not from non-custodial wallet where the user has full control over. I know the chinese government and the US can trace transactions down to exchanges and uncover hidden behind wallets they intend to confiscate but as a bitcoin hodler who uses new wallet address for every transaction it might make tracking more difficult especially if we try our very best to avoid CEX. Its hard to recover confiscated bitcoins. In most case government use those funds for national projects or reserves.

The reason why non-custodial wallets are more secure compared to any third party custodial system in storing any of your digital assets is simply due to their ability to ensure your privacy. Any of the major governments have some advanced tracking systems which would allow them to trace transactions through various networks, however, generating a new wallet every time you perform the transaction will add extra privacy, which will make blockchain tracing much more difficult. There are several vulnerabilities when you use a custody system because there is a direct link between the wallet balance and the identity of the user. In case they manage to seize these assets, these assets go straight into their treasury to fund their programs.

[PrivacyG]

The reason why non-custodial wallets are more secure compared to any third party custodial system in storing any of your digital assets is simply due to their ability to ensure your privacy.

No, the reason they are more secure is that a non custodial wallet does not sit on a server and has only one person controlling it, preferably offline and unable to connect it to the outside World.

Any of the major governments have some advanced tracking systems which would allow them to trace transactions through various networks, however, generating a new wallet every time you perform the transaction will add extra privacy, which will make blockchain tracing much more difficult.

You generate a new Address, not a new Wallet.

[Woodie]

If there is enough evidence that is beyond reasonable doubt that this company didn't hold it's part of the bargain then the pendulum swings against them, then there is proof of ownership or transaction happening.. if users can produce this then the Chinese government should give those coins to its rightful owner's because that's how a functional society sorts things out, unless the Chinese government have something else lined up.

[BlackBoss_]

If there is enough evidence that is beyond reasonable doubt that this company didn't hold it's part of the bargain then the pendulum swings against them, then there is proof of ownership or transaction happening.. if users can produce this then the Chinese government should give those coins to its rightful owner's because that's how a functional society sorts things out, unless the Chinese government have something else lined up.

If you are a Chinese, living in China mainland, I am sure that you can not sue the Chinese government for your benefit. Doing this is like a suicide attempt from you, so understanding this painful fact, you will know what to do for safety of yourself and your family. Finance is important for our life quality but if our physical safety has high potential of damage if we take legal action against the Chinese government, we must forget that legal action and get rid of it from our possible-things to do.

With the fact of how the Chinese government governs the nation in many decades, and how that nation is structured, you can not expect the Chinese government CCP will act for benefits of Chinese citizens.

[perfect999]

Chinese prosecutors have been battling the growing use of Bitcoin for underlying duplicitous activities, which has compounded into a whopping dollar sum, with the case coming to a head after a U.K. court ruled that Chinese law governs victims’ claims to the coins.
Prosecutors allege that Qian Zhimin, the alleged controller of Tianjin Lantian Gerui Electronic Technology, recruited associates to sell fake wealth management products nationwide from 2014 to 2017 without financial regulatory approval, promising investors guaranteed returns, which raised some RMB 40.3 billion ($2.8 billion).

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.

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.

Well, if it's possible and they can find the information of the victims who made investments with the fraudsters who ran away with their funds, then the government should obviously return their money, and any country with morally correct government leaders would do that. If they can't find any data themselves about the victims, they can make an announcement and tell everything about it, and ask their people to reach them for a claim for their funds that they had lost in those scams within the specified years. If people reach them with enough proof and details that actually prove that they did invest in those schemes, they should get their funds back.

However, I think we all know that such things barely happen. Most of the times, governments that seize bitcoins or other assets from criminals, they simply go to government treasury, and they either liquidate them immediately or do it in portions, just like how the USA has done or have been doing with the bitcoins they recovered from the silk road incident. They have been selling them in portions, I remember the last time when they sold about 30K or above bitcoins, don't know about any later updates though.