German Government Raids Apartment, Confiscates and Sells $14M in Bitcoin

Earlier this week, German mainstream media outlet Der Tagesspiegel reported that local authorities had raided the apartment of a criminal group and confiscated more than $14 million in Bitcoin and other cryptocurrencies including Bitcoin Gold, Bitcoin Cash, and Ether.

Waited Out Hard Forks

German law enforcement arrested members of a criminal group and raided their residences around June 2017. Almost immediately after their arrest, the criminals agreed to forfeit their private keys and access to their cryptocurrency wallets, surrendering 1,312 Bitcoin and 220 Ether.

The German government commenced a sale of the stolen cryptocurrencies in November and sold the criminal group’s holdings throughout November and December. Because 1,312 Bitcoins were confiscated before July and October, the government was able to benefit from the Bitcoin Cash hard fork in July and the Bitcoin Gold hard fork in October, obtaining 1,312 Bitcoin Gold and 1,312 Bitcoin Cash in the process.

In June, 1,312 Bitcoin and 220 Ether were worth $3.6 million, as Bitcoin and Ether were valued at $2,700 and $220 respectively. By November, due to the appreciation in the value of both Bitcoin and Ether, and the Bitcoin Cash and Bitcoin Gold hard forks, the total value of the digital assets seized was $14 million. Within six months, the cryptocurrency holdings of the criminal group confiscated by the German government had quadrupled in value.

The timing of the sale of the confiscated digital assets by the German authorities was advantageous as well, given that starting January 2018, the valuation of the cryptocurrency markets and major digital currencies such as Bitcoin began to fall sharply, and over the past five months, the cryptocurrency market lost nearly 70 percent of its value.

Benjamin Krause, a German prosecutor, noted that the authorities had been fortunate enough to convince the criminal group to forfeit their private keys and provide the government with access to their wallets, as without those keys, even if the local authorities had obtained the wallets of the criminals, they wouldn’t have gotten access to their funds.

History of Seizure

One member of the Bitcoin community claimed that the German government had arrested and raided the residences of Bitcoin traders and cryptocurrency investors in the past. In one instance, a Bitcoin investor claimed that he’d been arrested after sending funds to Poland to invest in the cryptocurrency market.

“My computer had 6 different 50+ character passwords to get through before they could get to my private keys. Must have pissed those Stasi off. They probably figured they held the mother load of all Dark Web crime on that computer. The reality is that I had copies of my keys elsewhere. As soon as they stole my funds I moved my Bitcoins somewhere else,” the investor said, adding that investing in Bitcoin using Polish banks and exchanges was and is still legal.

“They took the longest they could legally take to return it all (of course, because I wasn’t doing anything illegal – buying Bitcoin is legal in Germany even if you’re buying from a Polish exchange). Of course, I wiped all [my] computers and sold them immediately.”