Assume a fraudster parks his ill-gotten gains in a bank account. As part of fraud recovery proceedings, the court can issue a freezing order to freeze the fraudster's assets. In compliance with the order, the fraudster's bank will not allow any funds to be withdrawn from the impugned account.
This power of the court is often abused. I had a bank account with about $800 wrongfully garnished once. About 2 weeks later, after a hearing, the judge returned the money. However, in this time, the overdrafts and fines by merchants actually exceeded that original $800. Basically, the collateral damage exceeded the original damage.
What recourse is there if the fraudster parks his money in a Bitcoin wallet? Is there any way to obtain access to the BTC wallet, outside of the fraudster voluntarily giving up his public/private keys?
Not if it has been properly secured.
What if the fraudster uses an online wallet (e.g., blockchain.info)? If I understand correctly, in such cases, online wallets (i.e., public and private keys) are held by a third party (e.g., blockchain.info). Could such third parties be compelled to comply with a freezing or seizure order to hand over the keys? Or could their servers be searched to retrieve the keys?
The most secure online wallets do not hold your public key. They hold a data file that can be decrypted with your password. They do not have a copy of this password as that would make your private key susceptible to any hacker. They might be able to freeze your online account, but if you have a backup, you could just import your private key to another wallet. I actually did this when blockchain.info was not working for a couple days and needed access to some btc. I just downloaded electrum and imported one of my private keys.
Assuming the fraudster hosts (?) his own BTC wallet. Would seizing his physical hard drive give authorities access to public and private keys, and therefore his wallet?
If the wallet is not properly secured, then yes. It appears that Ross Ulbricht did not secure his bitcoin wallet sufficiently. The FBI were able to confiscate his bitcoins when they arrested him and got his laptop. Then again, they may only have confiscated the bitcoins associated with silk road. He might have a separate stash elsewhere that hasn't been touched.
Assuming the public/private keys cannot be found (i.e., either the fraudster will not cooperate or the keys cannot be recovered from his hard drive, his diary, etc.). Can authorities obtain the public/private keys by issuing subpoena to the ISP? Or through packet sniffing?
No, the private key is used to encrypt the transaction. The transaction is then sent over the network. It must match the public key located on the blockchain. The private key is not normally sent over the internet, although online wallets often have weaknesses associated with this.
Basically, how can authorities get their hands on a fraudster's Bitcoin wallet, outside of the fraudster's cooperation?
They can't if it is properly secured.
In a world full of corrupt power hungry governments, Bitcoin returns power over money back to the people.
