Freezing cryptoassets became easier for the authorities when the relevant sections of the Economic Crime and Corporate Transparency Act 2023 came into force on 31 January 2024. This act extends the capability of the Proceeds of Crime Act 2022 by introducing a new Chapter. This new chapter replicates powers enjoyed by the police and certain authorities to freeze physical assets such as cash and property.
What is an Asset Freezing Order?
An asset freezing order is an order obtained, in criminal cases, by the police and certified financial investigators from the courts. It authorises them to attach assets.
An asset freezing order can also be obtained in a civil case when just cause is shown to the court. The court will supervise the freezing order until its determination.
What does the Asset Freezing Order affect
When an asset freezing order is obtained, it freezes the assets on either a crypto trading exchange or in a crypto wallet. It also allows physical assets such as a USB drive or memory stick to be seized.
This means the crypto exchange cannot allow any interaction with the cryptoassets without permission from the courts. Access to the crypto wallet is controlled by the courts. Physical items seized by the police or authorised financial investigator are also subject to the authority of the courts.
What challenges can you bring?
As the cryptoassets are held to the order of the court, the only route to seek their release is through the courts.
You will need to mount a challenge to unfreeze the cryptoassets and to regain control over them.
In criminal proceedings, the owner of the cryptoassets will need to persuade the court that they are uninvolved in any criminal activity or wrongdoing. Even if the court does not unfreeze the order, you may be able to persuade it to release some part of the cryptoassets for living or business expenses.
Asset freezing orders are time limited
It is important to be aware that asset freezing orders are time limited. They will initially be in place for 48 hours. An application needs to be made to extend this to 6 months. Further applications need to be made and the maximum time that an asset freeze can apply is 3 years. In each instance, those looking to extend the order, must justify why keeping the order in place is necessary.
On each occasion that an application for an extension is made, those affected by the order can make representation to the court seeking their release.
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 on 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.