Authorities in the U.K. have seized approximately $7.7 million (£6 million) in illicit cryptocurrency assets since April 2024, as revealed by a recent investigation.
Criminals increasingly favor cryptocurrencies for laundering dirty money and financing terrorism. In response to this growing challenge, the U.K. updated its regulations last year to empower the National Crime Agency (NCA) and police with the ability to freeze, seize, and permanently eliminate cryptocurrencies linked to criminal activities.
This authority allows law enforcement to freeze cryptocurrency wallets for a duration of up to three years. Officials can also confiscate the assets if a court determines that the funds are derived from unlawful sources or intended for criminal use.
Furthermore, this power enables law enforcement to confiscate any cryptocurrency wallets suspected of being associated with criminal entities without needing to execute an arrest.
The authorities now also possess the right to destroy confiscated cryptocurrencies if they believe returning them to circulation would not serve the public interest. This includes privacy coins frequently utilized by criminals to mask the origins of their funds.
Largest Frozen Wallet Found on Coinbase
Documents reviewed indicate that the most significant freeze order was placed on a wallet hosted by Coinbase, which held $1.94 million (£1.5 million) in tokens.
This order was initiated by the Newcastle Upon Tyne Magistrates’ Court on March 18, at the request of His Majesty’s Revenue and Customs (HMRC), suggesting potential ties to tax evasion.
The owner of the wallet remains unidentified.
Anticipation of More Crypto Freeze Orders
While the $7.7 million figure might seem minor compared to the billions of dollars of cryptocurrency traded globally each day or the amounts confiscated from traditional bank accounts, legal expert Nick Barnard believes authorities in the U.K. are just beginning to leverage their new powers effectively.
He suggests that officials require additional time to fully acclimate to these changes. Conversely, lawyer Siobhain Egan, who represents clients with frozen assets, argues that the government is intensifying efforts to freeze cryptocurrencies as part of a rigorous campaign against money laundering and terrorism financing. She remarked:
“We are fully anticipating a wave of crypto freezing orders in the future.”
Egan echoed Barnard’s sentiments, noting that authorities are gradually adapting to a rapidly evolving landscape, but highlighted that HMRC is improving its operations and that the NCA is adopting a more assertive stance in addressing illicit cryptocurrency.
Bridging Investigative Gaps
Egan, who leads Lewis Nedas Law, pointed out that investigators can request the freezing of cryptocurrency wallets belonging to suspected criminals without their awareness. This tactic effectively prevents targets from transferring their assets during ongoing investigations.
Interestingly, the freezing process occurs even before the conclusion of an investigation. She stated:
“The recipient of a freeze order must respond to inquiries from authorities, which can aid in building a case against them within the broader investigation.”
According to Egan, this approach, made possible by the newly granted powers, significantly aids in addressing shortcomings in the investigative process.
Persistent Challenges
Egan noted that most individuals whose cryptocurrency wallets have been seized or frozen in the U.K. are foreign nationals, complicating the freezing process.
Furthermore, Barnard emphasized that it is feasible to freeze cryptocurrencies only when they are held on centralized exchanges or wallet providers such as Coinbase, Kraken, or Binance. Additionally, U.K. authorities can only act if these organizations have connections to the U.K.
Criminals may also secure their illicit crypto through private wallets accessible solely via personal keys.
A significant barrier remains the lack of understanding of cryptocurrency and blockchain technology among regulators and law enforcement agencies. Barnard commented:
“Most police officers and financial investigators lack knowledge of cryptocurrencies, resulting in insufficient resources dedicated to understanding and investigating this area.”
Moreover, Barnard contends that cryptocurrencies represent a small fraction of the illicit funds that are laundered or utilized for criminal activities, with traditional methods continuing to dominate this landscape.
(This article has been reformatted, and the original source has been omitted.)
