One of the biggest challenges of law enforcement throughout the world is to devise a means of seizing cryptoassets. Being intangible, cryptoassets are difficult to attach. That means that the focus must be on other elements of the crypto environment. Recent developments in the law mean that the police in the UK now have more tools to enable cryptocurrency asset seizure.
What new powers are available to aid the seizure of cryptoassets?
The Economic Crime and Corporate Transparency Act 2023 introduced changes to the Proceeds of Crime Act 2002 (the “2002 Act”). The replication of tried and tested seizure measures for other assets in the 2002 Act meant that the authorities now enjoy new powers based on real life experience when dealing with tangible assets. Specifically, the new Chapter 3C of the 2002 Act sets out the basis on which cryptoassets can be searched for, seized and held.
What are the principal areas of focus to seize cryptoassets?
Due to their intangible nature, the main focus on cryptoassets seizure is on crypto wallets and crypto exchanges. Where a wallet is seized, it can then be held until the courts authorise its release. Also, by exercising diligence against an exchange, the cryptoassets can be detained and held pending a resolution in court.
Court intervention and oversight
An important aspect of this new legislation is the involvement of the courts throughout the process. The authorities must make a case to the courts (except in the case of an emergency seizure) to authorise the initial seizure. Thereafter, the courts must give consent to the continued retention of the cryptoassets.
Indeed, the maximum length of time the cryptoassets can be held is two years with the option for the authorities to hold them for an additional one year in exceptional circumstances. However, the authorities must make the case for the additional retention period and the courts must consider whether it is warranted. Otherwise, the right to hold the asset will end.
Remedies for cryptoassets owners
As the courts are involved in cryptoassets seizure cases, those affected can make representation to seek their release. The courts will weigh up the benefit to the authorities in retaining control of the cryptoassets. If the court is no longer satisfied with the reasons given for their retention, it will order their release. The court will also take into account the financial damage sustained by and the inconvenience caused to the owners of the cryptoassets by their retention. Where the cryptoassets are detained by the authorities, the owners cannot use or trade them and potentially miss out on opportunities to make significant gains.
Cryptoasset seizure, retention and release specialist solicitors
The cryptoasset solicitors at Lewis Nedas Law are experts in their field. They 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.