During its early years, Bitcoin was strongly linked to the black market and criminal activity. While this reputation has largely been squashed in 2018, there remains incidents where – much like standard currency – cryptocurrency is stolen. It’s great to see that criminal activity is minimal in the cryptocurrency market these days, but there are still scams in effect catching out unsuspecting investors. This has brought around a major question. After an illegal operation has been shut down and the proceeds of crime have been seized, what happens to the stolen cryptocurrency and where does it end up?
On the auction block
International investigations the world over are shutting down illicit cryptocurrency operations, which means that huge amounts of digital currency are regularly being seized. These measures have occurred in Bulgaria, Germany, the UK, and the US to great success. Back when these police raids first started happening, there was a lot of debate with regards to what to do with the related proceeds of crime. For many countries, the funds would simply sit idle, that was until the US made the call to start auctioning off seized cryptocurrency.
The first cryptocurrency auctions were conducted by United States Marshals Service (USMS). Through various different sized lots of Bitcoin, the federal law enforcement agency put a large amount of BTC back into the public domain. The three lots were 2,500 BTC, 813 BTC, 500 BTC. On the day of the auction Bitcoin’s value fluctuated between $11,500 and $12,000, so the auction earned the state approximately $44 million. Germany – seeing US auction success – also moved forward with auctions of seized tokens, with the state of Hesse hoping to generate a solid sum from the sale of the 126 seized Bitcoins.
Bulgaria’s missing millions
When you hear about the success that other countries are having with cryptocurrency auctions, everyone is wondering what Bulgaria will choose to do. The country is rumored to have seized around 213,000 Bitcoins through various police operations. This equals approximately one-fifth of Bulgaria’s national debt, which currently stands at $16 billion. Many have questioned why the country has yet to pull the trigger and start auctioning off its Bitcoin haul, which could be worth upwards of $2 billion.
Throwing more confusion into the mix, it’s now not known if Bulgarian authorities still actually possess the seized Bitcoins. According Ivan Geshev (Bulgarian Special Prosecutor’s Office) the government was never in possession of any seized Bitcoins to begin with, but this statement has been doubted by many. If Bulgaria were able to “find” the seized Bitcoins, it could represent far and away the biggest cryptocurrency auction in history.
More auctions to come
The battle against cryptocurrency crime is well underway, with coins being seized all around the world. This means that more auctions are likely to be on the horizon. These auctions could in turn have a deterrent effect, as the “proceeds of crime” will be redistributed throughout the crypto sphere. In a real positive, these auctions will also provide a good source of income for state revenues.
While an increase in cryptocurrency auctions is expected in the near future – becoming a lot less secretive in the process – there is an issue on the horizon. It’s pivotal that international authorities become uniform in how they approach the auction process. Auctioning procedures at this point are dictated nation by nation, with there being a huge difference in how they’re conducted. Guaranteeing a transparent and fair process is crucial when it comes to redistributing what is effectively huge amounts of cryptocurrency. It’s also being advocated that an ID system be implemented to ensure that auctioned funds aren’t immediately being linked to illegal activities all over again.
Putting stolen Bitcoin back in circulation
Cryptocurrency criminals have been put on notice, as authorities are crushing illicit operations every day. This has meant that huge amounts of BTC are regularly being seized, before police auctions are putting this Bitcoin back into circulation. Now, we can’t tell you when and where these auctions take place. But, what we can tell you is that if you’re in the market to secure large lots of Bitcoin and are willing to enter a bidding war to get it, you might want to explore the world of cryptocurrency auctions further.