Dutch authorities have secured the contents of cryptocurrency wallets amounting to €25M believed to be used in a range of criminal activities, including human trafficking, fraud, and tax evasion.
Crypto exchanges cooperated with the Dutch watchdog, the FIOD, and the Public Prosecution Service throughout the investigation. Dutch authorities suspect that both Dutch and foreign criminals were part of the crimes that resulted in the forfeiture and that international perpetrators will be sent to foreign governments, based on extradition treaties.
One of the findings of the investigation is that criminals counteract unwanted exchange rate fluctuations by converting cryptocurrency to stablecoins. It is unclear what the Dutch government will do with the forfeited assets.
The challenge of seized crypto
While cryptocurrency transactions are publicly visible on the blockchain, it takes specialized forensic analysis to link a user with a wallet address, making bad actors a challenge to trace. Unfortunately, cryptocurrencies have at times been used in a plethora of criminal activity, which includes blackmail scams, fake COVID-19 vaccines, and illegal sales on the dark web.
In Sweden, a man was sentenced to a lengthy prison term after pleading guilty to a crypto Ponzi scheme. According to Susanne Lynch, a professor at Utica College, whose area of expertise is in economic crime, the international reach of crypto has made it a utility used by international syndicates and terrorists.
Earlier this year, the Israeli bureau of counterterrorism unit issued a seize order for cryptocurrency wallets being controlled by Hamas. According to the digital assets forensics company, called Elliptic, 84 wallets were seized, with $7.7M, which was obtained through crypto donations.
What happens to seized digital assets?
Crimes involving cryptocurrency range from ransomware to illegal online markets. Anchorage Digital, a federally chartered bank in San Francisco is one of the few institutions in the world that stores and liquidates digital assets seized by federal law enforcement. The U.S. Department of Justice has granted Anchorage a contract to do just this, following a 2019 announcement that it needed help with what to do with forfeited digital assets. The services that banks like these provide are technically complex, according to Diogo Monica, Anchorage’s co-founder, and president.
The early days of crypto saw the shutting down of the Silk Road, an online marketplace to sell illegal items, which received payment in bitcoin. A wallet was seized then, containing 30,000 bitcoins, which was subsequently sold for an unprecedented $19M. The whole process primarily established a procedure for forfeiting and disposing of cryptocurrency.
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