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In a groundbreaking case, a judge in Southwark Crown Court ordered the first-ever confiscation of Bitcoin. The cryptocurrency, worth more than £900,000, was confiscated from Grant West, who was convicted of serious cybercrimes.

West used an online identity to carry out cyberattacks on over 100 organisations all over the world. He sold the information he collected from these attacks and received his fees in cryptocurrency. 

The volatile nature of Bitcoin posed a challenge when it came to calculating how much West should be ordered to pay back in the POCA confiscation order. At the time of West’s arrest, around £1 million worth of cryptocurrency was seized. However, due to fluctuations, the value had dropped at the time the confiscation order was being considered. The court took account of the change in value and ordered West to repay an amount based on the current value of Bitcoin, which resulted in a confiscation order of £922,978.14.

The difficulty in valuing Bitcoin during a criminal trial 

One of the biggest challenges in cryptocurrency cases is calculating the proceeds of crime. Fiat currency (government-issued currency not tied to a physical commodity, such as gold or silver) has a centralised exchange rate. However, cryptocurrencies, like Bitcoin, have no such rate, making its value subject to fluctuations over short periods of time. In December 2017, the value of one Bitcoin soared to around £18,000. However, by May 2018, it had fallen to below £7,000. When West’s assets were seized, the value was calculated to be around £8,500 per Bitcoin. 

What is a confiscation order?

A confiscation order is a court order under the Proceeds of Crime Act 2002 requiring a convicted defendant to pay back money they have gained as a result of criminal activity. An application for a confiscation order is usually made by the prosecution, however the court can initiate confiscation proceedings if it believes it is appropriate. The details of the confiscation order, including the amount and term of imprisonment for non-payment, are considered by the court once a defendant has been convicted. 

What can be included in a confiscation order? 

To calculate this amount, the court will look at the financial advantage or value of the property the defendant has benefitted from as a result of their criminal conduct. In West’s case, his benefit was worked out by valuing the Bitcoin. However, confiscation proceedings can be far-reaching and may include assets not directly related to the crime where certain criteria for confiscation are met. 

What if the property is not available? 

Where a confiscation order is made, the defendant must pay the amount outlined unless they can prove that some or all of the amount is no longer available. Where there is evidence to show that the amount is no longer available, they will be required to pay only the available amount.

As part of the confiscation order process, the court will also determine the available amount – this is the value excluding any payments that should be prioritised over the confiscation order or any tainted gifts that have been made. 

Where the defendant’s assets amount to less than the amount of the confiscation order, they may apply to the court for a reduction. To have the reduction granted, they must be able to show that their assets are not sufficient to pay the amount detailed in the order. 

The court will consider all the defendant’s assets at the time of the making of the application for reduction. This includes any assets which have been acquired since the order was made. 

Where the value of the defendant’s available amount is less than the benefit from their offences, but it is later discovered that they have additional assets, the prosecutor may apply to the court for an increase in the confiscation order.

Contact our POCA Defence Lawyers, London

The authorities and courts have taken a heavy-handed approach to applying the Proceeds of Crime Act. Our specialist defence solicitors, with extensive experience in serious crime and fraud, have the skills and knowledge to defend our clients against the draconian powers under POCA. We provide a highly strategic and tenacious approach to this area of law, which has allowed us to get excellent results even in the most complex cases.

Three of our team represented clients affected by Operation Rize (the seizure of 7,000 safety deposit boxes in London by SOCA in June 2008). We have also secured the prompt return of much of our clients’ property and have represented those facing criminal proceedings, civil restraint and tax investigations with success. You can refer to our case list for more details of some of our experience in this field.

If you are concerned about a confiscation order, contact our lawyers today. You can call us on 020 7387 2032 or complete our online enquiry form.

 

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