The United Kingdom may have crossed a legal milestone with the use of a civil recovery order to access a hacker’s stolen cryptocurrency.
British authorities have seized cryptocurrency worth more than £750,000 from a convicted hacker. More significantly, the High Court order may have broken new legal ground. According to a report from the Law Gazette, it may be the first recorded instance of a civil recovery order to gain access to a crypto wallet.
CPS Obtained a Special Recovery Order
The Crown Prosecution Service (CPS), the state prosecutor, in collaboration with the Tarian Regional Economic Crime Unit, utilized special powers granted by the Proceeds of Crime Act 2002 to recover the illicit funds.
In the United Kingdom, a civil recovery order is a legal mechanism for reclaiming assets acquired through unlawful means.
The police searched the criminal’s family home after receiving an intelligence tip-off. They found a black book with twelve “recovery seeds” inside.
The seeds helped them access a wallet with a significant amount of cryptocurrency. They also found two more recovery seeds, which allowed them to take a smaller amount of cryptocurrency from another digital wallet.
The CPS had evidence to show that the cryptocurrency had connections to the original hacking offenses. To ensure they retrieved the funds, the CPS asked for an order to freeze the hacker’s assets before a conviction. This was originally announced on July 18.
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However, the hacker agreed to follow a High Court order that forced a handover of all the crypto assets. Although, in the CPS announcement, there was little information given about the nature of the hacker’s crimes.
Adrian Foster, Head of CPS Proceeds of Crime Division, said in a CPS statement:
“The CPS is committed to depriving criminals of their ill-gotten gains and will use the Director of Public Prosecution’s civil powers to do so even where criminal proceedings are not brought.
“This criminal thought that he had managed to hide his crypto but, working with law enforcement, we were able to locate, seize and recover this tainted property so that he could not benefit from his illicit wealth on release from prison.”
The UK Recently Passed a Bill Establishing Crypto as a Regulated Activity
Similar legal innovations that allow courts to take control of cryptocurrencies have come into effect elsewhere. On July 26, a Singaporean judge ruled that crypto assets were property able to be “held in trust.”
The court judgment sets a precedent for the treatment of cryptocurrencies, allowing them to be treated as subject matter in enforcement orders.
On June 29, the UK passed a new bill regulating the crypto industry. The Financial Services and Markets Act 2023 aims to bolster the competitiveness of the UK’s financial markets. Furthermore, the bill also established crypto as a regulated financial activity.
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