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Taking custody of Bitcoin or another cryptocurrency does not, by itself, make the seizure permanent. Under U.S. Department of Justice policy, agencies generally keep seized cryptocurrency in the form they took it until forfeiture becomes final. After that, the government disposes of the property under applicable law and written policies. Depending on the case, the outcome may be return, liquidation, or authorized victim compensation.
Seizure, custody, and forfeiture are different stages
A seizure places cryptocurrency under government control; it is not the final decision that the government may keep it. The property may be held while court proceedings or an administrative forfeiture process determines what happens next. The actual outcome depends on the case and applicable law.
The DOJ’s Justice Manual, updated January 2026, says cryptocurrency generally should not be liquidated until a final order of forfeiture is entered or administrative forfeiture becomes final. That policy reflects the possibility that property may need to be returned.
How the government takes and stores cryptocurrency
How a seizure is carried out
The method depends partly on how the cryptocurrency is held. DOJ’s Asset Forfeiture Policy Manual 2025, Chapter 4, distinguishes between cryptocurrency in a self-custodied wallet and cryptocurrency held by a service provider:
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- Self-custodied wallet in the United States: DOJ guidance calls for a seizure warrant for cryptocurrency possessed and controlled by the owner, served on the owner or counsel.
- U.S.-based virtual asset service provider: The agency should obtain and serve a warrant on the provider, such as an institutional exchange.
- Foreign-located provider: DOJ directs prosecutors to consult its Office of International Affairs. A case may require mutual legal assistance or similar authority.
Initial storage and transfer
For temporary storage, DOJ policy calls for agencies to use government-controlled self-custodial or cold-storage wallets. Each cryptocurrency type should be kept in its own wallet; an agency may use one or more wallets for a seizure. Agencies are advised to consult the U.S. Marshals Service (USMS) before planning a seizure because USMS may not be able to store or liquidate every type of cryptocurrency.
After seizure, the agency processes the asset through its forfeiture department and assigns it a Consolidated Asset Tracking System (CATS) identification number. Some supported cryptocurrencies may then be transferred to a wallet supplied by USMS or its contractor for pre-forfeiture storage. That handoff depends on the asset and current procedures; it is not available for every token.
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Is seized Bitcoin sold immediately?
Generally, no. The DOJ policy manual says cryptocurrency should be kept in the form seized and not converted to cash or another cryptocurrency until forfeiture is final. Its stated reasons include the risk of price fluctuations and the possibility that the government could have to make an owner whole if the property must be returned.
The manual recognizes limited circumstances in which prosecutors may seek an interlocutory sale or pretrial conversion. Prosecutors and agents must consult DOJ’s Money Laundering and Asset Recovery Section (MLARS) before seeking an interlocutory sale order. The manual identifies a request or consent by all parties with an ownership interest, and certain cases involving victims’ pecuniary losses, as circumstances in which an order may be sought.
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What happens after forfeiture becomes final?
For property in its custody that is subject to forfeiture or has been forfeited under laws enforced by DOJ and certain other federal agencies by agreement, USMS has primary authority for management and disposal. Cryptocurrency liquidation must follow the written policies of the seizing agency and USMS.
There is no single sale method or timetable established for every cryptocurrency. The result depends on the asset, the final legal outcome, and the policies that apply to that case.
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Special handling for anonymity-enhanced cryptocurrencies
DOJ treats anonymity-enhanced cryptocurrencies (AECs) differently. Its guidance says law enforcement should keep AECs in agency self-custodial or cold-storage wallets until it receives further notice from USMS. Prosecutors should seek guidance from MLARS or USMS about disposition, and MLARS must approve requests to sell AECs or place them into official use.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Can the cryptocurrency be returned or used to compensate victims?
Return to an owner
Whether an owner can recover seized cryptocurrency, and any deadline for making a claim, depends on the proceedings and applicable law. The sources cited here do not establish one deadline for all cases. Anyone seeking return should review the specific forfeiture notice and court filings and consult qualified legal counsel.
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Compensation for victims
The DOJ Asset Forfeiture Program says it can recover assets to compensate victims when federal law authorizes it. Compensation is not automatic, and a victim does not necessarily have a claim to a particular cryptocurrency asset. The case and governing law determine whether compensation is available. See DOJ’s FAQ on compensating victims with forfeited assets and its overview of the Asset Forfeiture Program.
Quick Recap
What to check in an individual case
- The forfeiture notice and its instructions for challenging the forfeiture or seeking return.
- The court docket, if the seizure is connected to a court case.
- Whether the asset is still at the seizure stage, in pre-forfeiture storage, or subject to a final forfeiture decision.
- Advice from a qualified lawyer familiar with the relevant forfeiture process.
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