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In U.S. federal cases, cryptocurrency is not government property merely because investigators seize it. Authorities must have legal authority to take control, secure the assets, and manage them while forfeiture is pending. If a court ultimately orders forfeiture, the government may dispose of the assets under applicable law; eligible victims or other claimants may receive payments, but recovery is not automatic.
The details below describe the U.S. federal process, not a universal procedure. Other governments have different laws, agencies, and custody arrangements.
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How do U.S. federal authorities seize cryptocurrency?
The process starts with authority to seize the specific asset. The Justice Department’s 2025 Asset Forfeiture Policy Manual says an agency should obtain a seizure warrant unless it already has warrant authority or the owner consents. How authorities obtain control depends in part on where the cryptocurrency is held.
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|---|---|---|
| Self-custodial wallet | Obtain the required authority and transfer the cryptocurrency to a government-controlled wallet. | Someone else may possess a copy of the private key, so prompt transfer can help prevent an outside key-holder from moving the funds. |
| U.S.-based virtual asset service provider (VASP), such as an institutional exchange | Obtain and serve a warrant on the provider in a manner similar to a bank-account seizure. | The provider holds the assets, so the process differs from taking control of a self-custodial wallet. |
| Foreign-located VASP | Prosecutors should consult the Justice Department’s Office of International Affairs (OIA); foreign restraint may require mutual legal assistance or comparable process. | DOJ policy warns against accepting a transfer from a foreign VASP without required process or OIA permission. |
Seizure planning also depends on the token. DOJ’s manual notes that thousands of cryptocurrency types exist and cautions that the U.S. Marshals Service (USMS) may not be able to process an asset it cannot store or liquidate. Prosecutors and agents are advised to consult USMS about whether a targeted asset can be handled before seizure.
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What happens to crypto after authorities take control?
Move it into government-controlled custody
After authorization, the seizing agency should move the cryptocurrency to a government-controlled self-custodial or cold-storage wallet. DOJ policy directs agencies to keep each cryptocurrency type in its own wallet, so a seizure involving multiple types may require multiple wallets. Enhanced-anonymity cryptocurrencies have separate handling instructions and should not be assumed to follow the ordinary transfer route.
Track and transfer eligible assets
The asset is processed through the seizing agency’s forfeiture department and assigned a Consolidated Asset Tracking System (CATS) identification number. For eligible cryptocurrency, the agency may transfer it to a receiving wallet provided by USMS or its contractor for pre-forfeiture storage, subject to current USMS Complex Assets Unit procedures. The seizing agency and the eventual custodian are not necessarily the same entity: USMS has primary management and disposal authority over assets in its custody under DOJ enforcement, while Treasury custodians handle relevant Treasury assets.
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Maintain custody records
Managing cryptocurrency requires control of private-key access as well as reliable records of custody and value. A 2022 DOJ Office of the Inspector General (OIG) audit examined USMS practices during fiscal years 2017–2021. It found that USMS used supplemental spreadsheets because CATS lacked functionality for daily cryptocurrency inventory management. The audit reported inaccurate spreadsheet records, gaps in written procedures and edit controls, and no periodic reconciliation. It also identified shortcomings in recording custody and valuation and no established process for recording new assets created after a cryptocurrency fork.
Those are findings about the audit’s FY2017–FY2021 scope, not proof that every weakness remains today. The same audit found that USMS had adequate safeguards over storage and access to cryptocurrency in its custody.
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Is seized cryptocurrency already forfeited?
No. Seizure puts an asset under government control; it does not, on its own, make the forfeiture final. A forfeiture case must proceed under the applicable legal route, and recognized third-party claims may affect the outcome. DOJ policy generally bars Department personnel from using property seized and pending forfeiture, including for official use, until a final order of forfeiture issues.
Forfeiture is also distinct from the later decision about what to do with property that has been forfeited. The Justice Department says disposition of property forfeited to the United States is an executive-branch decision. Orders generally direct forfeiture to the United States for disposition according to law, while addressing recognized third-party claims.
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Can the government keep or sell forfeited cryptocurrency?
After forfeiture, the Attorney General may dispose of assets under applicable statutes. DOJ guidance describes sale and other legally available methods; it does not establish that every token will be sold or handled in the same way. Forfeiture proceeds enter the Assets Forfeiture Fund under the governing statutory framework. The Fund pays specified program expenses, which can include authorized asset management and disposal and victim compensation.
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Do victims get seized cryptocurrency back?
Not automatically. DOJ describes remission as a discretionary process under 28 C.F.R. Part 9 through which the Department may compensate qualifying victims with assets forfeited from perpetrators. Eligibility depends on the crime connected to the forfeiture. DOJ specifically says the Assets Forfeiture Fund is not a general victim fund, and a seizure alone does not establish that a victim will be paid.
A pending case illustrates the distinction
In a June 18, 2025 release, updated July 30, 2025, DOJ described a civil forfeiture complaint against more than $225.3 million in cryptocurrency connected, according to the complaint, to laundering related to cryptocurrency investment fraud. The release said more than 400 suspected victims were believed to have lost funds and quoted officials discussing an eventual return of funds. Those statements described an alleged scheme and an intended recovery objective; the release did not establish a final forfeiture judgment or completed compensation.
What the available figures do—and do not—show
- Nearly 200 seizures: DOJ OIG reported that DOJ was managing nearly 200 cryptocurrency seizures as of June 2021.
- About $466 million: The OIG report valued those assets at about $466 million in September 2021. Both figures are historical snapshots, not a current government-wide inventory.
- More than $225.3 million: The 2025 DOJ release cited this amount in one civil forfeiture complaint. It is not a national inventory total or a final forfeiture judgment.
The figures come from different dates and describe different things: a historical inventory count and valuation in the OIG audit, and the amount named in one later complaint. They should not be combined into a current total.
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Why one seized-crypto case may differ from another
- Jurisdiction and legal route: Forfeiture authority and procedure depend on the governing law and the case’s route.
- Wallet or provider custody: Self-custodial assets, assets at a U.S.-based provider, and assets at a foreign provider require different steps.
- Agency and custodian: The agency making a seizure may not be the final custodian; DOJ and Treasury components have distinct responsibilities.
- Token support: A token that cannot be safely stored or liquidated through the relevant federal process may require different planning.
- Case status and claims: Property pending forfeiture is not finally forfeited, and recognized claims can affect disposition and payments.
These differences are why a seizure announcement should not be read as proof that the government has permanently acquired the cryptocurrency or that victims have already been repaid.
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