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As crypto assets become more widespread, an increasingly diverse and professional set of bad actors are following them . Every year, criminal organisations ranging from industrial fraud to global money laundering networks to state-sponsored cybercrime syndicates exploit blockchain to move billions of dollars of illicit funds. However, the traceable nature of crypto assets makes them uniquely recoverable compared to traditional financial instruments, with the right technology and expertise.
Chainalysis' data, technology, and training enable law enforcement and ecosystem partners to track, freeze, and disrupt entire illicit financial networks. From assisting in the largest-ever freeze of USDT to dismantling global fraud networks, our intelligence is the foundation of leading law enforcement operations around the world.
In addition to deterring bad actors, Chainalysis' solutions generate tangible financial benefits and transform recovered funds into resources for future investigations at a time when cost-effective law enforcement is more critical than ever. The recently announced U.S. Strategic Bitcoin Reserve reflects this shift in philosophy, paving the way for the U.S. government to hold its Bitcoin as a long-term treasury resource rather than immediately sell it.
To date, Chainalysis has helped its partners seize and freeze approximately $12.6 billion worth of crypto assets1, returning funds to victims and providing governments with realized ROI on blockchain research.
What is asset seizure and confiscation?
The terms "seizure" and "confiscation" are often used interchangeably, but they refer to different legal actions.
Asset seizure occurs when authorities take temporary control of assets suspected of being linked to criminal activity to prevent those funds or property from being illegally moved or hidden while legal proceedings are ongoing.
Asset forfeiture , on the other hand, refers to the transfer of ownership to the government when a court determines that seized assets are related to criminal activity.
It is important to understand the difference: seizure preserves assets during an investigation (temporary custody), while forfeiture (permanent ownership) completes the process and allows the government to dispose of, repurpose, or return the assets to victims.
Outside of criminal cases, private investigators such as lawyers, forensic accountants and insolvency professionals may pursue asset recovery in civil courts. Using blockchain analysis and legal mechanisms, court-ordered asset preservation, injunctions and freezing orders can be sought with the aim of recovering stolen or fraudulently obtained crypto assets. Legal systems around the world, including the UK , Canada and Singapore , are increasingly recognising crypto assets as property , making traditional asset recovery remedies applicable.
Powers to seize and confiscate assets often vary significantly from country to country. Some jurisdictions, such as the UK, have amended their Proceeds of Crime Act 2002 (POCA) to allow law enforcement to search and seize crypto assets prior to arrest where there is sufficient suspicion of criminal activity, and have streamlined procedures to enable authorities to quickly secure and realise seized crypto assets.
What is an asset freeze?
Asset freezing is a legal or regulatory measure taken in many jurisdictions to prevent individuals or entities suspected of engaging in illegal activities, such as fraud, money laundering, or violations of sanctions, from accessing or transferring certain funds. For example, in the United States, the Treasury Department's Office of Foreign Assets Control (OFAC) issues orders to U.S. citizens blocking the property and property interests of certain individuals or entities ("blocked persons") and prohibiting their transfer or use without their express authorization.
Similarly, law enforcement authorities in the United States typically apply to courts for seizure orders and custodial authority over assets when they have probable cause. In traditional financial systems, banks and financial institutions freeze assets based on court orders or regulatory directives, and can also proactively freeze customer accounts if they suspect illegal activity, fraud, or violations of their terms of use.
A crypto-specific legislative change introduced in the UK is the Crypto Wallet Freezing Order (CWFO). This new provision allows authorities to seek a CWFO against crypto wallets managed by a UK associated Crypto Asset Service Provider (CASP) if the wallet is suspected to contain criminal proceeds or assets intended for illegal activity. Once granted, withdrawals or payments from such wallets will be prohibited. This law provides an important framework for the seizure of crypto assets and ensures that law enforcement has the powers they need to effectively pursue and thwart crypto crimes. As policy around crypto assets becomes more clear, this approach is likely worth considering for governments around the world.
In crypto, centralized stablecoin issuers play a similar role to traditional financial institutions in that they have the ability to restrict access to assets related to illicit activities. Unlike decentralized crypto assets like Bitcoin, stablecoins are generally centrally controlled, and issuers like Tether (USDT) and Circle (USDC) have the ability to freeze or burn tokens related to illicit activities. These issuers monitor transactions in real time using blockchain analytics and work closely with law enforcement agencies around the world. If a suspicious wallet is identified, stablecoin issuers can blacklist the address, preventing criminals from using frozen funds and assisting authorities in asset recovery.
This unique feature makes stablecoins a good choice for compliance and a useful tool in the fight against financial crime: by freezing assets, stablecoin issuers can help law enforcement stop illegal activity and prevent further misuse.
Confiscated crypto assets could benefit law enforcement
Confiscated crypto assets present a unique opportunity for law enforcement. Whereas in traditional asset forfeiture, seized cash or property is often quickly sold, crypto assets have the potential to increase in value. However, restitution remains a top priority, as victims of crypto-related crimes may be entitled to recover the stolen digital assets themselves, not just their equivalent value at the time of theft or seizure. In the United States, where restitution is not available, confiscated assets, including crypto assets, ultimately go to an Assets Forfeiture Fund or Treasury Forfeiture Fund to pay for expenses related to asset seizure, including blockchain analytic solutions and programs.
Despite these limitations, the development of a U.S. Strategic Bitcoin Reserve raises interesting possibilities. The current framework does not allow U.S. law enforcement to directly leverage crypto assets confiscated at the agency level, but policymakers are considering using crypto assets for broader government benefits. What makes this Strategic Bitcoin Reserve unique is that rather than relying solely on increased seizures, policymakers are actively seeking to acquire Bitcoin on the open market and to hold more Bitcoin than law enforcement recovers. The move suggests that Bitcoin is widely recognized as a strategic asset, and could potentially reshape how the government finances its operations. It also reinforces the idea that seized assets can have long-term impacts even if they cannot be immediately liquidated.
How cryptocurrency seizure and confiscation works
The investigation process by public authorities usually starts by collecting blockchain transaction details and using Chainalysis Reactor to track the flow of illicit crypto assets. If sufficient evidence is found, authorities will work with crypto exchanges and custodians to prepare warrants to confiscate assets with the approval of law enforcement, either by transferring the assets to government-controlled wallets or freezing them until the legal process is completed. In the United States, upon conviction, the government usually auctions off the confiscated assets and compensates victims, usually based on the value of the assets at the time of the loss. Any remaining confiscated assets and proceeds are auctioned and transferred to an asset fortification fund or treasury fortification fund to satisfy the government's forfeiture obligations, reinvest in law enforcement operations, or contribute to community efforts.
The private sector has a critical role to play in the fight against financial crime. Collaboration between crypto platforms, stablecoin issuers, and law enforcement, strengthened by Chainalysis data, is key to effective enforcement. Chainalysis’ cryptoasset compliance solution enables platforms to detect and stop fraudulent activity at scale. It also provides the insights needed to spot unusual transactions, structured payments, or funds associated with illicit activity. Exchanges and issuers can work together to proactively freeze assets, block bad actors, and report them to financial authorities before illicit funds are laundered or converted to fiat. This partnership structure is already having real-world impact, such as Tether’s proactive freeze of $225 million USDT . Exchanges and issuers, at the forefront of the cryptoasset ecosystem, are not just gatekeepers but important partners in compliance and enforcement.
Successful crypto asset seizure and confiscation requires expertise, training and technology. Investigators must be able to expertly identify and secure digital evidence, such as crypto wallets and private keys. Chainalysis streamlines the entire investigation and recovery process by providing training programs, expert support, and tools to improve outcomes.
Chainalysis Support for Asset Seizure
For over a decade, Chainalysis has partnered with government agencies around the world to assist with hundreds of cryptocurrency-related cases, including freezing and seizing assets, helping secure an estimated $12.6 billion worth of illicit crypto assets. A recent report stated that there are currently approximately 198,000 BTC of Bitcoin in the custody of the U.S. government. Chainalysis has assisted in the recovery of a large portion of these seized funds by providing the most comprehensive blockchain tools and training to law enforcement and regulators around the world.
Chainalysis Reactor
Chainalysis Reactor is an advanced blockchain analysis tool that enables law enforcement, financial institutions, and compliance officers to track cryptocurrency transactions, identify illicit activity, and link cryptocurrency addresses to real entities. By providing visibility into complex transaction flows across multiple blockchains, Reactor helps investigators uncover money laundering, fraud, ransomware payments, and other financial crimes. It integrates with sanctions lists, darknet market data, and Open Source Intelligence (OSINT) to provide timely insights to aid in investigations.
Chainalysis Wallet Scan
Chainalysis Wallet Scan is a tool designed to help law enforcement efficiently identify crypto assets associated with seed phrases . It automates the conversion of seed phrases into public keys, then scans 15+ blockchains, 35+ wallets, and 50+ million addresses to identify associated assets, delivering results in minutes. Wallet Scan runs securely offline, ensuring the integrity of evidence by keeping seed phrases private. Wallet Scan allows investigators to act quickly and minimizes the risk of assets being moved.
Chainalysis Asset Seizure Certification
Specialized training with the Chainalysis Asset Seizure Certification (CASC) course provides law enforcement officers with the practical skills and knowledge they need to effectively execute digital evidence management, asset recovery and deliver immediate operational impact.
Chainalysis Supports Global Crypto Asset Seizures
Chainalysis has played a key role in some of the largest and most complex cryptocurrency investigations and seizures, each of which relies on Chainalysis's close collaboration with law enforcement, demonstrating that illicit crypto assets can be effectively tracked, seized, and returned to victims or reinvested in crime prevention efforts.
Silk Road hack seizures – $3.36 billion
Affiliated agencies: US IRS-CI and DOJ
Recovery amount: Approximately $ 3.36 billion1
In November 2021, the IRS-CI seized 50,676 Bitcoin from James Zhong, an American who pleaded guilty to wire fraud for stealing funds from Silk Road in 2012. It is one of the largest cryptocurrency seizures in history. Zhong exploited flaws in Silk Road's withdrawal system and then used mixing services and exchanges to launder the funds. Investigators used investigative tools to trace the transactions and link Zhong to the crimes. A 2021 raid recovered 50,491 Bitcoin hidden in a popcorn tin, and 861 Bitcoin was later turned over.
Silk Road seizure – $1 billion
Involved agencies: US IRS-CI and DOJ
Recovery: Over $1 billion
In November 2020, the U.S. Department of Justice (DOJ) seized over $1 billion in crypto assets linked to Silk Road, the first modern-day darknet market. Using Chainalysis tools, IRS-Criminal Division investigators traced the illicit bitcoin to hackers who stole funds from Silk Road, identifying 54 previously undetected transactions. The bitcoin was transferred to a government-controlled wallet and, if the forfeiture process is successful, will be transferred to the Treasury Forfeiture Fund (TFF). The TFF will reinvest in law enforcement programs to train investigators to better identify and seize illicit funds.
Colonial Pipeline Ransomware Recovery – $4.4 million
Affiliated agencies: US FBI and Department of Justice
Recovery: Approximately $4.4 million
In May 2021, Colonial Pipeline paid approximately $4.4 million in Bitcoin to Russia-based ransomware group DarkSide following a cyberattack that disrupted fuel supply numbers in the southeastern United States. The Federal Bureau of Investigation (FBI) used Chainalysis tools to identify the movement of funds through DarkSide's network and track the ransom payment, which allowed them to seize $2.3 million worth of Bitcoin from the attackers' wallets.
Hezbollah and Iran's Quds Force terrorism money laundering case – $1.7 million seized
Affiliated organization: Israel NBCTF
Amount recovered: Approximately $1.7 million
In June 2023, Israel's National Counter-Terrorist Financing Task Force (NBCTF) seized approximately $1.7 million worth of crypto assets linked to Hezbollah and Iran's Quds Force, the first known seizure of crypto assets linked to Hezbollah. Chainalysis tools helped investigators trace the funds and identify wallets used to move them through intermediaries in Syria.
Public-Private Partnerships to Strengthen Compliance and Enforcement
"The collaboration between Chainalysis, law enforcement, and our crypto industry partners dramatically strengthens our investigative capabilities, our potential to disrupt criminal activity, and our ability to recover assets. In these cases, authorities were able to cut off funding for major illicit activity with the help of Chainalysis and our crypto industry partners."
Chainalysis, Tether and OKX Take Down Major Romance Scam Pipeline
Affiliated agencies: U.S. Department of Justice and Secret Service
In late 2023, Chainalysis, Tether, and cryptocurrency exchange OKX worked with the U.S. Department of Justice and Secret Service to investigate a massive romance scam in Southeast Asia. Using Chainalysis, investigators traced fraudulent transactions, enabling Tether to freeze approximately $225 million worth of USDT held in the perpetrator's wallets, the largest USDT freeze ever.
Chainalysis and Tether Support Operation Endgame
Responsible authority: Dutch FIOD
In September 2024, the Dutch Financial Intelligence and Investigation Office (FIOD) shut down the illegal cryptocurrency exchanges Cryptex and pm2btc , with the help of Chainalysis and Tether, for facilitating money laundering. Authorities seized €7 million (approximately $7.6 million) worth of crypto assets during the operation.
Operation Spincaster: Taking Down Cryptocurrency Fraud Globally
Chainalysis-led Operation Spincaster, announced in July 2024, is a series of focused efforts between law enforcement and private sector partners to dismantle cryptocurrency-fueled fraud networks, including approval phishing and pork butchery romance scams. Throughout 2024, Chainalysis coordinated Operation Spincaster across six countries: the U.S., Canada, the U.K., Spain, the Netherlands and Australia, providing investigative training using Chainalysis' blockchain analytic tools. These efforts generated more than 7,000 investigative leads representing approximately $162 million in fraud-related losses, enabling partners to close fraudulent accounts and seize illicit crypto assets.
In one notable Spincaster engagement in Delta, Canada, Chainalysis tools helped local law enforcement track and seize millions of dollars in stolen crypto assets from a scam. During this investigation, investigators identified 1,100 victims and investigated 240 fraud-related addresses, uncovering losses of over $25 million. Using Chainalysis tools, law enforcement tracked and froze the illicit funds, including $1.2 million in blacklisted addresses subject to international seizure, as well as $800,000 in fraudulent transactions from a Canadian exchange.
Turning asset seizure into business advantage
As financial crime evolves alongside the mass adoption of crypto assets, authorities need every advantage to stay one step ahead. Crypto asset seizures are more than just a legal procedure; they are a strategic imperative for authorities. Effective seizures disrupt criminals, generate revenue and new leads, and are cost-efficient.
Chainalysis is the only partner that enables authorities to track, seize, and leverage crypto assets at scale. Our blockchain intelligence and real-time investigative support provide the speed and precision they need to take swift, targeted action. Legal action is a critical component of bringing criminals to justice, but it takes time. However, seizures dismantle criminal financing networks, making it harder for bad actors to continue their activities and forcing them to identify new sources of funding. Seizures also allow governments to reinvest seized funds into their own activities, reducing their reliance on taxes.
Beyond asset recovery, effective seizures also reduce enforcement costs and deter future crime. As crypto assets become riskier and less rewarding for criminals, authorities have an opportunity to shift the balance of power. Chainalysis provides the technology, expertise and support to ensure that seizures are not just an end point, but a force multiplier in the fight against financial crime. By turning seizures into an operational advantage, Chainalysis helps authorities take precise, faster action to stop crime at the source.
footnote
[1] All cryptocurrency values are as of the time of seizure.
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