How German federal authorities deal with seized Bitcoin

Some members of the German Bundestag - including Anke Domscheit-Berg, Dr. André Hahn and Gökay Akbulut - have asked the German government 24 questions in a "minor interpellation" on the handling of seized "crypto assets". The inquiry also includes questions about the authorities' procedures and techniques, the fight against money laundering and the quantity of cryptocurrencies seized.

The request shows that the general provisions of the Code of Criminal Procedure (StPO, Sections 111b et seq.) serve as the legal basis for the seizure, confiscation, attachment or confiscation of Bitcoin and Co. in Germany. If a criminal origin of the cryptocurrencies is established, a seizure can also be carried out without identifying or convicting an offender. The competent public prosecutor's office has the say in the investigation proceedings and can also order an emergency sale after examination, for example if there is a risk of a significant loss in value or if safekeeping would involve considerable costs or other difficulties.

The seized crypto assets are generally recorded in the budget of the federal state whose court has ruled on the case. To date, there have been no exceptions in which crypto assets have been seized in favor of the federal government.

If the cryptocurrencies were lawfully seized as part of an international law enforcement operation, the seized assets normally remain in the country that seized them, unless there are legal requirements that require a different distribution, for example to compensate victims or for distribution between the countries involved.

The Federal Government's answers suggest that the BKA and the customs authorities use so-called "authority wallets" for the safekeeping of cryptocurrencies, which they control themselves. However, further questions on the procedures of the BKA and the Financial Intelligence Unit (FIU), on the technology and software used for confiscation, on money laundering with cryptocurrencies and on cryptomixing services are not addressed in detail. The reason for this is strict security and data protection standards (classified information) or other tactical investigative reasons. Nevertheless, some figures on suspected cases of money laundering and the amount of crypto units confiscated are provided.

It is known that the number of reports of suspected money laundering in connection with cryptocurrencies has risen since 2021. From 2021 to 2024, mainly credit institutions and financial service providers reported a total of 27,484 cases. After examination by the FIU, around a tenth of these (2,707 cases) were passed on to the public prosecutor's office.

From 2019 to 2023, the Federal Criminal Police Office (BKA) and other federal authorities confiscated cryptocurrencies worth a total of 118,247,024 euros in
investigations and transferred them to the authorities' self-managed wallets - more than 83 million euros in 2023 alone. The value corresponds to the respective equivalent value at the time of confiscation. Today, the equivalent value in euros (at least for Bitcoin) is significantly higher.

Exact figures on the quantity of crypto units are only known from 2020 and listed up to 2023. As far as Bitcoin is concerned, around 4,122.5 Bitcoin were seized by the BKA between 2020 and 2023, with the largest share of around 3,564 BTC in 2023. The customs authorities have also seized around 27 BTC since 2019, meaning that the federal authorities have seized a total of almost 4,150 Bitcoin, currently worth around 249 million euros, over the four years.

The approximately 49,858 Bitcoin seized by the BKA for the Saxon state government in January 2024 from the proceedings against the operators of the illegal movie streaming platform movie2k.to are not yet included in the statistics. However, these were already "distressed sold" by the Dresden Public Prosecutor General's Office in June and July 2024 for more than 2.6 billion euros - Blocktrainer.de reported.

In addition to Bitcoin, the BKA, Federal Court of Justice, customs and other federal authorities have also seized numerous other cryptocurrencies, including ADA, ETH, ETC, BNB, LINK, XRP, SHIB, DOGE, DOT, EOS, IOTA, XMR, ZEC and others.

However, it is not clear from the request whether the crypto assets were sold, such as the almost 50,000 BTC in Saxony, and why or why not - after all, a loss in value, and thus a reason for an emergency sale, is more likely for most cryptocurrencies than for Bitcoin.