The Biden administration wants to facilitate the seizure of cryptocurrency without criminal charges

The Biden administration wants to facilitate the seizure of cryptocurrency without criminal charges

Buried deep in 61 recent pages Report By the US Attorney General, the Biden administration has called for a significant expansion of the federal government’s ability to seize and hold cryptocurrencies. If the proposed changes are enacted, they would enhance both criminal forfeiture, which requires a conviction to permanently confiscate property, as well as civil forfeiture, which does not require a conviction or even criminal charges.

It is worth noting that the issuance of the report was accompanied by Advertising New Digital Asset Coordinator Network. This national network is staffed with over 150 federal prosecutors who will be trained to “draft civil and criminal forfeiture procedures.”

Due to the borrowed nature of cryptocurrencies, they are sometimes assumed to be immune to government confiscation. But the reality is completely different. Last year, the US Marshals – the Justice Department forfeiture trustees –I managed Nearly 200 cryptocurrency seizures worth $466 million.

Since fiscal year 2014, the FBI, Secret Service, and Homeland Security investigations have collectively done took over Nearly $680 million worth of cryptocurrency (estimated at the time of the seizure), with hundreds of investigations still active related to the digital assets. But even those amounts pale in comparison to the IRS criminal investigation confiscation $3.8 billion worth of virtual currencies between fiscal year 2018 and 2021.

However, the Department of Justice argued that the cryptocurrency “revealed limitations on the confiscation tools used” by federal law enforcement and recommended “several updates to existing law.” First, the attorney general wants to expand the most arbitrary form of civil confiscation, which occurs without any independent or impartial judicial oversight.

Under “administrative” or “non-judicial” forfeiture, it is the confiscation agency – not the judge – who decides whether property should be confiscated. The federal government can use administrative forfeiture to take almost anything, except real estate and property worth over $500,000.

The $500,000 cap currently applies to cryptocurrency, but the attorney general wants to “raise the $500,000 cap for crypto and other digital assets.” This would eliminate one of the very few restrictions on administrative confiscation. Even if Congress refuses to act, thanks to a law enacted last year, the Treasury Secretary can simply end the cap by adopting a new regulation.

This proposal is very disturbing. Administrative expropriation provides very little protection for property owners. After the property is confiscated, the government only needs to send a notice of administrative confiscation. If the owner fails to quickly file a claim with his or her own property, it will automatically be forfeited.

Since confiscated property may be the owner’s most valuable asset, owners often do not have the means to repay. However, even when a claim is filed, the landlord may still not spend his day in court. according to Report By the Institute of Justice, federal agencies have rejected more than a third of all claims for withheld funds as “incomplete,” with most claims dismissed for “technical reasons.”

Unsurprisingly, given that administrative forfeiture cases are much easier for the government to win, administrative forfeiture accounted for nearly 80% of all forfeitures conducted by the Department of Justice and 96% of forfeiture activity in the Treasury.

Although the Ministry of Justice praises administrative confiscation for being “effective” and for relieving the “unwarranted burden” in the court system, in fact administrative confiscation has burdened the lives of thousands of victims who did nothing wrong.

just ask ken quran. After coming to America from the Middle East, he opened a small store in Greenville, North Carolina. But in June 2014, IRS agents broke into his store and told Kane that they had a forfeiture order of $570,000 and had already confiscated every penny in his bank account – $153,907.99. This money was Kane’s life savings, earned by nearly 20 years of long hours running his business.

Less than three months later, Kane’s bank account was administratively confiscated. Without these savings, Kane would have reached the point of financial collapse. He struggled to support his family, pay off his mortgage, and cover the line of credit he had to take out to keep his shop standing. Kane has not been charged with a crime.

“I couldn’t believe this could happen in America,” Kane lamented. “I don’t understand how the government, in this country, can take the entire bank account of an honest businessman without proving that he did something wrong.”

Fortunately, with help from the Institute of Justice, Kane later Foot “Petition for forgiveness or mitigation” (essentially a pardon for confiscated property). After a media storm, in February 2016, the IRS agreed to return all the money they wrongly took from Kane. Although he lost fiat currency instead of cryptocurrency, as Kane’s story shows, there is absolutely no need to make administrative confiscation easier to use.

In addition to expanding administrative confiscation of cryptocurrency, the Department of Justice will “welcome amendments to provide criminal and civil confiscation authority for commodity-related infringements.” Allowing criminal confiscation after a conviction for fraud or manipulation of the cryptocurrency markets would be a valuable tool to crack down on fraudsters.

Currently, most cryptocurrencies It is considered Commodities, not stock. So under federal laws governing commodities, prosecutors can “charge fraud and manipulation in the cryptocurrency markets.” But unlike securities, those laws “do not permit the confiscation of illicit gains from criminal activities involving goods.”

but stretch civil Forfeiture throws a very wide net and makes it more likely that innocent owners will lose their cryptocurrency in government confiscation. After all, civil forfeiture lacks a conviction clause, unlike criminal forfeiture. Furthermore, there is a direct financial incentive for federal agencies to pursue forfeiture cases: once property is expropriated (either civil or criminal), the expropriating federal agency can keep up to 100% of the proceeds.

Unfortunately, the proposed expansion of asset confiscation is part of a broader attack on cryptocurrency, including attacks on cryptocurrency for otherwise tolerable financial privacy. The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is currently studying a Base That would extend the intrusive reporting requirements to custodial wallets (ie those managed by a third party) – the same reporting requirements that led the IRS to confiscate Kane’s money.

If adopted, the wallet host would have to submit detailed reports to FinCEN on every non-hosted wallet transaction over $10,000, including personal information such as the names and physical addresses of both parties involved in the transaction. Since the blockchain is public in nature, a single report on a single transaction will effectively become a skeletal digital key, allowing the federal government to hack all other transactions of the wallet.

This is moving exactly in the wrong direction. Regardless of how the midterm elections have changed, Congress must reject the proposed encryption campaign and rein in civil forfeiture.

#Biden #administration #facilitate #seizure #cryptocurrency #criminal #charges

Leave a Comment

Your email address will not be published. Required fields are marked *