The Biden administration has advocated for a significant increase in the federal government’s authority to seize and detain cryptocurrencies, a statement that is buried deep in a recent 61-page report from the U.S. Attorney General. The proposed amendments, if accepted, would reinforce both civil and criminal confiscation, the latter of which does not necessitate a criminal accusation or conviction in order to permanently seize property.
Cryptocurrency is sometimes thought to be immune from government confiscation because to its pseudonymous nature. The truth, however, is far different. Nearly 200 seizures of cryptocurrencies worth $ 466 million were handled by US Marshals, the custodians of the Justice Department seizures, in 2017.
In particular, a new network of digital resource coordinators was revealed in conjunction with the report’s publishing. More than 150 federal prosecutors from across the country will receive training on “drafting of civil and criminal confiscation actions” as part of this countrywide network.
Since the beginning of the current fiscal year in 2014, the FBI, Secret Service, and National Security Investigations have together seized cryptocurrencies valued at about $ 680 million (at the time of the seizure), and there are hundreds of ongoing investigations involving digital assets. However, even these sums are insignificant in compared to the IRS Criminal Investigation’s astonishing $ 3.8 billion in virtual currency seizures made between the 2018 fiscal year and the 2021 fiscal year.
When property is seized “administratively” or “non-judicially,” the seized entity, not a judge, decides whether it should be forfeited. Almost anything can be seized by the federal government through administrative confiscation, with the exception of real estate and possessions worth more than $500,000
The Justice Department suggested “many modifications to the existing legislation,” saying that the cryptography had “exposed the limits to the seizure instruments used” by federal law enforcement. First, without any independent or impartial judicial oversight, the Attorney General intends to increase the most abusive type of civil forfeiture.
The Attorney General wants to “increase the $ 500,000 cap for cryptocurrency and other digital assets,” which is now the case for cryptocurrencies.
One of the few administrative forfeiture restrictions would be eliminated as a result. Due to a law passed last year, the Secretary of the Treasury could easily abolish the cap by proposing a new regulation even if Congress chooses not to take anything.
This proposal raises serious concerns. The protection offered to property owners by administrative confiscation is appallingly inadequate. The government merely needs to issue a notice of administrative forfeiture following the property’s seizure. A landlord’s property is automatically forfeited if they don’t file a claim for it right away. Owners frequently lack the resources to respond, even though confiscated property may be the owner’s most valuable possession. Even though a claim has been submitted, the owner might not be able to appear in court. More than a third of all requests for cash attachment have been rejected by federal agencies as “deficient,” with the majority of requests being turned down for “technical reasons,” according to a report by the Institute for Justice.
Unsurprisingly, administrative lapses accounted for over 80% of all forfeits conducted by the Department of Justice and 96% of forfeiture action since they are substantially simpler for the government to prove. from the Treasury Department. Administrative confiscation has a negative impact on the lives of thousands of innocent victims, despite the Justice Department’s praise for its “efficiency” and ability to lessen “undue burdens” on the legal system.
Ken Quran, please. In Greenville, North Carolina, he built a tiny convenience store after moving to America from the Middle East. However, in June 2014, IRS officers walked into Ken’s business and informed him that they had a warrant to confiscate $ 570,000 and had already taken out the entire $153,907.99 from his bank account. That sum represented Ken’s entire life savings, which he had accumulated over over 20 years of working hard hours to run his firm. Less than three months later, Ken’s bank account was administratively confiscated. Without those savings, Ken was brought to financial breaking point. He struggled to support his family, pay off his mortgage, and cover a line of credit he had to take to keep his shop afloat. Ken has never been charged with a crime.
“I never thought it could happen in America,” Ken complained. “I don’t understand how, in this country, the government can take an honest businessman’s entire bank account without proving that he did something wrong.” Fortunately, with the help of the Institute for Justice, Ken subsequently filed a “petition for remission or mitigation” (basically a pardon for the forfeited property). After a media firestorm, in February 2016, the IRS agreed to return all the money they had wrongfully stolen from Ken. Although he lost fiat currency rather than crypto, as Ken’s story shows, there is absolutely no need to make it easier to use administrative confiscation.
In addition to expanding administrative confiscation for cryptocurrencies, the Justice Department “would welcome amendments to provide criminal and civil confiscation authority for commodity-related violations.” Allowing criminal confiscation after a conviction for fraud or manipulation in cryptocurrency markets would be a valuable tool in cracking down on scammers. Currently, most cryptocurrencies are considered commodities rather than stocks. Hence, according to federal commodity laws, prosecutors can “accuse fraud and manipulation in cryptocurrency markets.” But unlike titles, those statutes “do not allow for the forfeiture of illicit gains from criminal activities involving commodities.”
- The Biden Administration wants to make it simpler to seize cryptocurrency without facing legal consequences
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