After Law Enforcement in the US and the UK Seized Cryptocurrency, ‘Asset Return’ Never Really Happened
Original Article Title: "After Confiscating Cryptocurrency, US and UK Law Enforcement Agencies Return Almost 0% to the Victims"
Original Article Author: jk, Odaily
Since 2018, US and UK law enforcement agencies have seized over $40 billion in cryptocurrency assets in more than ten major cases. However, in the vast majority of cases, the victims have yet to receive a penny. The digital assets that should have been returned to the victims have quietly flowed into government treasuries, strategic reserve funds, and law enforcement operational budgets.
This article examines multiple typical cases, revealing this invisible second confiscation.
Is Anyone Curious Where the Money Goes After Confiscation?
In traditional criminal justice, the purpose of confiscating criminal proceeds is to deprive the criminal of the proceeds of crime and, where possible, compensate the victims. However, this logic no longer holds when law enforcement targets cryptocurrency.
Current US regulations (Federal Regulations) explicitly cap the compensation available to victims at the "fair market value on the date of the loss." This means that: if a victim loses 10 BTC when the price of Bitcoin is $5,000, even if the government holds the exact original coins worth millions, the victim can only claim $50,000. The huge premium brought by price appreciation belongs to the government by law.
The UK's legislation is equally "domineering." According to the Asset Recovery Incentivisation Scheme (ARIS), 50% of the confiscated assets flow to the law enforcement agencies involved, with the remaining 50% going to the Home Office. The funds that can be allocated to independent victim compensation channels are much smaller than the first two, and the application process is cumbersome with high thresholds.
In March 2025, US President Trump signed an executive order establishing a "Strategic Bitcoin Reserve," requiring the Treasury Department to hold rather than sell the confiscated bitcoins. This further strengthens the government's incentive to retain the assets, blocking potential paths for victim compensation at the institutional level.
Typical Cases: Where the Victims' Money Flows
· UK: The Case of Qian Zhimin, the World's Largest Single Cryptocurrency Confiscation
This is the world's largest single cryptocurrency confiscation to date. In October 2018, the London Metropolitan Police Economic Crime Command conducted raids on multiple properties, seizing approximately 61,000 bitcoins. The seized bitcoins were worth around £305 million at the time of the crime, which had risen to approximately £5.5 billion (~$7.2 billion) by the end of the trial.
The defendant Jian Wen (dual citizen of China and the UK, 42 years old) was a money laundering intermediary for this batch of Bitcoin, convicted in March 2024, and sentenced to 6 years and 8 months in prison; the mastermind behind the scenes, Qian Zhimin (Chinese citizen, 47 years old), was the founder of the Chinese company "Blue Sky GridSharp." Between 2014 and 2017, the company used high returns as bait to defraud more than 128,000 Chinese elderly investors, involving over $5.6 billion. She was arrested in April 2024, pleaded guilty in September 2025, and was sentenced to 11 years and 8 months in prison in the same year.

Annual Conference hosted by Blue Sky GridSharp
And the victims? The 128,000 victims are all Chinese citizens, many of whom are retired seniors, many of whom have spent their life savings just to purchase the company's assets. They all have a dream of getting rich, even in the liquidation compensation phase. At the current stage, both the UK government and the Chinese government have claimed sovereignty over this batch of Bitcoin. Civil asset recovery procedures are still ongoing, but legal experts admit that due to the dual national sovereignty dispute, the likelihood of victims ultimately receiving compensation is very low. In China, the collection of information about the victims has begun, but it is unknown how many people will ultimately receive compensation, whether the compensation will be equivalent to the value at the time or will include the appreciation of Bitcoin, or even if this fund will ultimately remain entirely with UK law enforcement agencies.
Flow of Funds: HM Treasury (anticipated). Actual Compensation to Victims: Zero, but the case is not yet concluded.
· United States: Silk Road Case, $3 Billion in "Unclaimed Assets"
Silk Road was the most notorious dark web drug trading platform in history. After the founder, Ross Ulbricht, was arrested in 2013, the huge amount of Bitcoin accumulated by the platform was gradually seized.
In November 2021, the IRS-CI seized 51,680 bitcoins worth over $3.36 billion from a single-board computer hidden in a floor safe in a residential home in Georgia. Zhong (32 years old, from Georgia) used a system vulnerability to steal this batch of coins in 2012 and then remained hidden for nearly a decade. In April 2023, he was sentenced to one year and one day in prison.
Due to Silk Road being an illegal platform, the court ruled that there was no "legitimate victim," and both batches of seized assets were directly forfeited to the government. In December 2024, a federal judge dismissed a claim from an investment firm, clearing the way for asset disposal by the government. Under the 2025 Strategic Bitcoin Reserve Executive Order, these assets may be permanently held in the federal reserve.
Funds Destination: U.S. Department of the Treasury Strategic Bitcoin Reserve. Actual Victim Recovery: Zero.
· Prince Group / Huione / Chen Zhi Case - $15 Billion Case
On October 14, 2025, the U.S. Department of Justice Eastern District unsealed an indictment in the New York federal court, charging Chen Zhi (also known as Vincent), the 37-year-old Cambodian national founder and chairman of the Cambodian Prince Holding Group, with two counts of telecommunication fraud conspiracy and money laundering conspiracy, alleging his leadership in operating an international scamming base that defrauded billions of dollars from global victims.
SIMultaneously with the criminal prosecution, the DOJ filed civil asset forfeiture lawsuits, targeting around 127,271 Bitcoins (approximately $15 billion), which are now under the custody of the U.S. government, marking the largest seizure operation in U.S. history. According to TRM Labs' on-chain analysis, these Bitcoins have been mostly dormant since December 2020, with signs of activity reappearing between June and July 2024, aligning with the DOJ's seizure operation.
On the sanctions front, the U.S. Department of the Treasury's OFAC collaborated with the UK's Foreign, Commonwealth & Development Office (FCDO) to sanction 146 affiliated targets of the Prince Group's transnational criminal organization; based on Section 311 of the PATRIOT Act, FinCEN issued a final ruling severing the Huione Group from the U.S. financial system. FinCEN determined that the Huione Group is a key money laundering hub for North Korean cyber hacking and Southeast Asian transnational criminal organizations, whitewashing over $4 billion in illicit proceeds from August 2021 to January 2025.
The detailed breakdown of funds laundered by the Huione Group includes: $37 million from North Korean cyber theft, $36 million from cryptocurrency investment scams, and $300 million from other online fraud proceeds. According to the FBI Internet Crime Complaint Center's 2024 report, cryptocurrency investment scams within the U.S. alone amounted to $5.8 billion in losses in just one year. In a confirmed case, the Brooklyn money laundering network transferred approximately $18 million from over 250 U.S. victims to Prince Group accounts between May 2021 and August 2022. Following the exposure of the incident, South Korea and Singapore subsequently imposed sanctions on the Prince Group, with the South Korean Ministry of Foreign Affairs calling it the "largest single sanctions action in history." The compensation plan for victims remains unresolved with no timeline set.
Funds Flow: Civil forfeiture proceedings pending; Actual Victim Recovery: As of February 2026, still zero.
· North Korean Lazarus Hacker Group, Only Tip of the Iceberg Recovered
The North Korean state-sponsored hacker group Lazarus Group (also known as APT38) has stolen over $5 billion in cryptocurrency since 2014, making it the most active cryptocurrency crime syndicate globally. Major incidents include: $620 million theft of the Ronin Network (Axie Infinity) in 2022; $100 million theft of the Harmony Horizon cross-chain bridge in 2022; and a $1.5 billion theft of Bybit in February 2025, marking the largest single cryptocurrency exchange hack in history.
The U.S. authorities have initiated multiple civil forfeiture lawsuits against assets, seizing approximately $50 million since 2020, which is less than 1% of the total amount stolen. In June 2025, the DOJ recovered $7.74 million in cryptocurrency assets related to North Korean IT outsourcing workers impersonating U.S. freelancers.
The vast majority of stolen assets disappeared on-chain after going through a mixer. The minuscule amount of recovered assets flowed into government seizure accounts, with no public compensation distribution plan. In the case of Bybit's $15 billion loss, the gap in victim recovery funds was mainly covered by the exchange's own reserves, not through law enforcement recovery.
Funds Flow: U.S. government seizure accounts. Actual Victim Recovery: Minimal to zero.
· LockBit Ransomware Case, $500 Million Ransom Left Unreturned
In February 2024, "Operation Cronos" led by the U.K. National Crime Agency (NCA), in collaboration with law enforcement agencies from the U.S., Europe, Australia, and 10 other countries, dismantled the global infrastructure of LockBit, seized 34 servers, and froze over 200 cryptocurrency accounts. In May 2024, the DOJ charged Russian citizen Dmitry Khoroshev with 26 counts, alleging that as the primary developer of LockBit, he received around $100 million in Bitcoin commissions. LockBit has extorted over 2,500 victims in 120+ countries since 2020, with a known total ransom amount exceeding $500 million, including over 1,800 victims in the U.S.
A law enforcement operation successfully distributed approximately 7,000 decryption keys, preventing some victims who had not yet paid ransom from suffering further losses. However, funds from organizations that had previously paid ransom (hospitals, schools, government agencies, etc.) were not recovered, and there was no specific compensation fund. Khoroshev is still evading justice within Russia, and OFAC has sanctioned him.
Funds Flow: Frozen accounts transferred to the government, pending allocation. Actual Victim Recovery: Decryption keys (but no cash compensation).
· BTC-e / Alexander Vinnik Case, Asset Recovery Challenges
Russian citizen Alexander Vinnik was arrested in Greece in July 2017. The BTC-e exchange he operated facilitated over $9 billion in Bitcoin transactions and was one of the world's largest Bitcoin money laundering platforms at the time. The U.S. Financial Crimes Enforcement Network (FinCEN) fined BTC-e $110 million. After serving 5 years in France, Vinnik was extradited to the U.S., where he pleaded guilty in May 2024. However, before formal sentencing in February 2025, he was released as part of a prisoner swap to return a detained American journalist in Russia, leading to the termination of the criminal case.
On June 30, 2025, the DOJ initiated a civil forfeiture lawsuit against the remaining BTC-e virtual currency, opening a 60-day claims window (until September 2, 2025). Users and other victims can file claims, but the review process is lengthy and requires detailed transaction records and KYC information. Given the complexity of the case assets and the large number of claimants, the final distribution outcome is highly uncertain.
Funds Flow: TBD. Actual Victim Recovery: Claims process in progress.
· Twitter Hack Case, Small-Scale Fraud Victims Never Compensated
On July 15, 2020, 17-year-old Florida teenager Graham Ivan Clark used social engineering tactics to breach Twitter's internal tools, hijacking about 130 verified accounts, including those of Obama, Biden, Elon Musk, Bill Gates, and others. He posted "double your Bitcoin" scam tweets, defrauding approximately $117,000 worth of Bitcoin within hours. Clark was sentenced to 3 years in prison in March 2021. Law enforcement agencies collectively seized over $3 million in Bitcoin under Clark's name (including proceeds from previous SIM swapping fraud).
The victims of this Twitter scam (regular users who were tricked into sending Bitcoin) have never received any compensation. The recovered cryptocurrency was seized by the government through regular procedures, with no specific compensation fund or appeal channel set up for Twitter scam victims.
Funds Destination: Seized by the U.S. Government. Actual Amount Received by Victims: Zero.
Why Are Victims Always Bullied Repeatedly?
The above case is not a coincidence but rather the inevitable outcome of two operating systems.
In the U.S., the law explicitly states that victims can only claim the "fair market value at the time of the loss," not the current value at the time of seizure. This means that if a victim lost 1 BTC when the Bitcoin price was $8,000 in 2019, even if the government now holds this Bitcoin worth $100,000, the victim can only claim $8,000, with the remaining $92,000 legally retained by the government.
In the UK, the Asset Recovery Incentivisation Scheme (ARIS) divides the seized assets into three parts: half goes to the law enforcement agencies involved, half goes to the Home Office, and the fund allocated to victims through a separate compensation channel is much smaller than what law enforcement agencies receive. For the 2024-2025 fiscal year, UK law enforcement agencies received approximately £160.3 million through ARIS, while victims' compensation was only about £47.2 million during the same period, a ratio of about 3.4:1.
The establishment of the U.S.'s Strategic Bitcoin Reserve in 2025 further solidified this scenario. An executive order clearly instructs the Treasury Department to hold, not auction, seized Bitcoins, making the federal government one of the world's largest Bitcoin holders. This reserve logic fundamentally conflicts with victim compensation.
Additionally, victims face procedural barriers: to apply for compensation, detailed claims must be submitted within 30 days after the notice is issued, including wallet addresses, transaction IDs, and KYC records. In cross-border cases, victims scattered across multiple countries are often unaware of the U.S. administrative process and will permanently lose their right to appeal if they miss the deadline.
In the case of Qian Zhimin, 128,000 elderly Chinese victims watched as their life savings investment turned into a legal dispute between the London Metropolitan Police and the UK Treasury; in the Silk Road forfeiture case, billions of dollars worth of Bitcoin were directly locked into the U.S. Strategic Reserve due to the legal determination of "no legitimate victim"; in the Huione case, despite tens of thousands of confirmed victims of Ponzi schemes, there is no compensation timeline in sight within the $15 billion forfeiture action.
If punishing criminals is seen as upholding justice, then who is paying the price for these "legitimate double extortion"?
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