With the rapid rise of cryptocurrency, the regulatory landscape is evolving to keep up with the challenges posed by this new asset class. The Economic Crime and Corporate Transparency Act 2023 has given UK authorities the power to issue cryptoasset restraint and freezing orders. As they get to grip with these new tools, it’s clear they will be used more frequently in the fight against crypto-related financial crime.
Cryptoasset Restraint Powers
The addition of Chapter 3C in the Proceeds of Crime Act 2002 has been a significant development. This new chapter allows the police and other authorities to focus on the crypto environment—wallets and exchanges—where assets are often held or traded. By targeting those, they can freeze assets in real-time, preventing their movement during investigations or legal proceedings.
Impact on Cryptoasset Owners
For cryptoasset holders, having their cryptoassets frozen can become a lengthy and frustrating ordeal. Initially, assets are frozen for up to 48 hours and, with extensions, up to six months or more. During this time, you cannot access or trade your holdings, often missing out on financial opportunities. Extensions are only granted if the authorities justify when the freeze should continue. Cryptoasset owners can challenge these decisions in court. However, these cases are complex and specialist legal advice is crucial.
The Growing Threat of Fraud
Fraudsters exploit the unregulated crypto space. They use fake exchanges and phishing scams to steal cryptoassets. With the speed and anonymity of crypto transactions, stolen assets can be moved across the world in seconds, making recovery hard. Asset freezing orders are one of the best tools to stop the damage. These orders stop the movement of stolen assets so authorities can get control and stop criminals benefiting from their crimes.
Proactive Freezing Orders on the Rise
Authorities are using freezing orders more proactively, especially in cases where investigations are just starting. With advances in blockchain analysis and cross-border cooperation, the police and the authorities can trace and freeze assets earlier in the process. This trend toward pre-emptive action will mean a lot more freezing orders will be used, giving authorities new tool in their fight against crypto-related crime.
What Can Cryptoasset Holders Do?
If your cryptoassets are frozen, you need to act fast. Delay can mean more financial damage, so get expert legal advice. A solicitor experienced in cryptoasset law can help challenge the order, get funds released for essential expenses, or even get the freeze lifted if criminal involvement cannot be proven.
The Future of Cryptoasset Freezing Orders
Cryptoasset freezing orders will be used increasingly as authorities get better at tackling financial crime in the crypto space. With governments around the world plugging regulatory loopholes, these orders will be a key tool for freezing and recovering laundered money.
Cryptoasset seizure, retention and release specialist solicitors
If you wish to challenge an asset freezing order, you should engage a solicitor with a track record of success in this area of law.
The cryptoasset solicitors at Lewis Nedas Law are experts in their field. We can advise and guide you through all aspects of seizure, retention and release of cryptoassets. If you need advice or assistance on any aspect of cryptoassets, please take expert legal advice from Lewis Nedas Law’s crypto asset solicitors.
Blog post by expert crypto asset defence solicitor Siobhain Egan. For expert, trusted legal advice, please telephone us on 020 7387 2032 or complete our online enquiry form.