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Sweden must repay $1.6M in Bitcoin to convicted drug dealer

200 points by djoldman 5y ago

fedreserved 5y ago
Seems logical? The steward of illegal gains,should keep the legal gains of the illegal fortune before the government.
fastball 5y ago
It's an interesting question. In the more classic sense, what proceeds should be stripped if you get cash in exchange for drugs and use that cash to buy GME calls which skyrocket? On the one hand it's all "blood money" / tainted, but the actual proceeds at the time of the crime have a specific value.
- collectedparts 5y ago
  > “The lesson to be learned from this is to keep the value in bitcoin, that the profit from the crime should be 36 bitcoin, regardless of what value the bitcoin has at the time,” [the prosecutor] reportedly said. It sounds like the police tripped a loophole in law by liquidating some of the BTC. Sounds like if the police had HODL'd they'd have been fine defending it as just look, these were the assets he had, we seized them. But since they liquidated, the defense got to say, hey, you already got the full proceeds.
  - thisiswater 5y ago
    My interpretation of the article is that the court recognized the proceeds in terms of Swedish Kroner at the time that the BTC were seized, so was unable to account for the increasing value of BTC in terms of Kroner - they had not legally seized ~$1.7m, they had legally seized $137,000, and so had to pay back the difference. From the article - "The lesson to be learned from this is to keep the value in bitcoin, that the profit from the crime should be 36 bitcoin, regardless of what value the bitcoin has at the time".
    - est31 5y ago
      In fact it makes it seem the fault of the prosecutor even and not the court. Quotes from the prosecutor from the Telegraph article. > "It has led to consequences I was not able to foresee at the time." > "I think we should probably invest in an internal education in the [prosecution] authority, as cryptocurrency will be a factor we'll be dealing with to a much greater extent than we are today. The more we increase the level of knowledge within the organization, the fewer mistakes we will make." I'm not familiar with the swedish legal system (and not a lawyer), but often you can only be convicted for things the prosecution requests/accuses you of. Otherwise you can't defend yourself in court. So the prosecution ordered the bitcoin to be seized as proceeds of the crime, but not in a correct way, so the court ruling contained the same wording that a specific value in swedish Kronen shall be seized. Had the prosecution demanded the seizure in terms of Bitcoin instead, the court would probably have approved it too. However, at this point it's too late to change the ruling. Courts exist to settle things, and one can't simply re-roll a prosecution case unless there were grave mistakes.
      - ClumsyPilot 5y ago
        I think you interpretation is accurate - the prosecution can decide if it's seizing assets or cash, either choice has consequences.
  - deleted 5y ago
    [deleted]
  - viceroyalbean 5y ago
    It's not that the police liquidated the BTC, it's that the argument that was made in court was for the current cash value of the BTC. Instead of arguing that the value of the crime was 36 bitcoin the prosecutor argued that if was $137000 which was equivalent at the time. One interesting consequence is that the drug dealer would have had to pay the difference if bitcoin had dropped in value instead of rising.
    - elcritch 5y ago
      As an American it's a bit surprising to me that Sweden actually follows the quaint notion of justice and rule of law. Sounds like they even require property taken to be specifically listed and related to a crime as proven in a court of law. In the US authorities would've likely been able to keep all the BTC, and also could've seized the drug dealers home and car if they had any. In Florida (and many other states) it was/is common practice that any excuse police made could be used to seize almost any of a person's property, essentially on the spot. Generally without even needing to arrest the person or charge them with a crime or get a warrant. Just based on "suspicion" on the cops behalf. Thank good Ole "rule of law" President Reagan and the war on drugs for that one. See: - https://cplaw-miami.com/police-seize-your-property-without-arrest/ https://cplaw-miami.com/police-seize-your-property-without-a... - https://www.vox.com/policy-and-politics/2017/12/1/16686014/phillip-parhamovich-civil-forfeiture https://www.vox.com/policy-and-politics/2017/12/1/16686014/p... - https://en.m.wikipedia.org/wiki/Comprehensive_Crime_Control_Act_of_1984 https://en.m.wikipedia.org/wiki/Comprehensive_Crime_Control_...
      - danuker 5y ago
        > Just based on "suspicion" on the cops behalf. It's fine, the dog jumped at the window of your stopped car. https://en.wikipedia.org/wiki/Detection_dog#Civil_rights https://en.wikipedia.org/wiki/Detection_dog#Civil_rights
    - zaarn 5y ago
      I don't think the dealer would have to pay the difference in value if it lost value. Otherwise, you'd have to pay for the loss in value of a seized car if it's sold only years later or the loss in value of gold bars seized if the market on those crashed in the meantime.
- jsmeaton 5y ago
  If you use the proceeds of crime to buy a house then can't that house be seized (jurisdictions probably have different rules, but..)? The house is then auctioned off. It's not valued at the time of arrest and any additional value returned to the person arrested. I don't understand why it could, or should, be any different for electronic stores of value (stock, options, crypto).
  - Blikkentrekker 5y ago
    Simply because the legal paperwork listed the value in Swedish crowns rather than in bitcoins. As I understand this article, the same would have happened if the legal paperwork listed the value of the house in crowns, and then the housing market rose and the house tripled in value. The only unusual thing with Bitcoins, is that the value thereof has risen to quite extreme proportions.
    - jsmeaton 5y ago
      Oh, I understand why it's happened in this particular case. It's a loophole they'll be closing for sure. My comments were directed at the parent: > what proceeds should be stripped if you get cash in exchange for drugs and use that cash to buy GME calls which skyrocket? > but the actual proceeds at the time of the crime have a specific value The specific value at the time is, in nearly every other situation, irrelevant. The mistake was putting a claim to a monetary value of *asset* rather than the *asset* itself.
- irjustin 5y ago
  It sounds like in Sweden you can only strip the value of asset (value in Swedish Krona, I imagine) related to the crime directly not the asset class itself. A guess at why it's like that would be - people flow value of drugs/illicit goods, rarely holding the value for long. This means the prosecutor wants to set an amount for "all drug deals they can convict for" and then try to seize that value. Clearly before crypto the only thing that would wildly fluctuate vs the country's currency is stocks. No one's doing drug deals in stocks so the law was written in value. If they did seize things like stocks it's clear they had a process to sell the liquid asset (they tried to sell the BTC), but they couldn't get their ducks in order to sell it, haha. I'm sure there's going to be a change to the law to seize the asset as a whole instead of pegging it to some particular value.
  - glenngillen 5y ago
    I guess the flip side to this has historically played in the favour of the authorities. Ill-gotten gains would be laundered through a casino where you’d turn it all over over the course of several hours playing a game with a low house edge. You’d lose a bit to the house, but now have some potential legitimacy to how you have the funds. I assume under this approach the authorities would have claimed the full amount you started with and not what you were now left with. Crypto just happens to have been a casino where people have been winning.
  - yxhuvud 5y ago
    They can do either, but they have to actually decide what they do. In this partivular case their was no established best practise of how to do, and the choice that was made backfired. They will alter their behaviour.
- vmception 5y ago
  Is it an interesting question? That prosecutor’s department in that country booked the value in fiat at the time and didn't have a mechanism for booking the value in the asset. People have been saying they have their own nexus currencies for the whole last decade, and others spent too much time ignoring that in. Now it bit Sweden in the ass, for now.
  - fastball 5y ago
    It's interesting (to me), because of the whole idea that crypto are in fact cryptocurrencies. So unlike buying a house or buying stock options, the argument can be made that the crypto is itself the medium of exchange and therefore the value in fiat is irrelevant. But this also means that if the crypto drops in price while the cops are HODLing it, they lose out.
    - vmception 5y ago
      agreed on that point my question is whether we should consider these crypto clean, or whether we should stop trying to determine if crypto provenance is clean or not as it doesn't seem possible to rely on the due process of every municipality worldwide, unless the state is deemed as the crypto washer - magically cleaning all crypto as it temporarily seizes and auctions them or returns them - in which case a state will take advantage of that
    - ClumsyPilot 5y ago
      The idea is to take away oroceeds of crime, not to make bank
      - vmception 5y ago
        Tell that to every municipality in the US over the last 20 years
human 5y ago
I guess HODL was easier while in jail.
jp0d 5y ago
Why did the Swedish govt buy so much drugs? #joke
dimeatree 5y ago
This article is way too focused on him being a drug-dealer.
- deleted 5y ago
  [deleted]
tantalor 5y ago
What would happened if the value had dropped in that time?
- dylan604 5y ago
  You give them the full BTC in return even if you have to buy the coins again. If the value goes up, you cash it out and return what the BTC was valued at the time of seizure and pocket the rest. See, I can play cops and robbers too. However, growing up I thought it was two distinct groups. The cops on one side, and the robbers on the other. As an adult, I see it was just two descriptions of the same group.
- pcthrowaway 5y ago
  Perhaps they would been liable for making up the difference? Although they could have then argued if the police had liquidated the bitcoin at the time of seizure, there wouldn't have been a loss.
dylan604 5y ago
So, who's going to enforce the gov't follow through? I don't know the intricacies of Sweden's gov't separation of powers and what not, but what kind of recourse is available to force the gov't to do this?
- rtkwe 5y ago
  In the US if the court really wants to I think it can start tossing government officials in prison for defying court orders for contempt of court. That's a fairly common feature of European courts and their descendants AFAIK. It's a very bad sign when that starts happening though, it's the system starting to fall apart.
- wutwutwutwut 5y ago
  This will not be an issue for the drug dealer. The part of the government who deals with this is separate from police and prosecutor and is the same organization which helps the electricity company getting their money if the home owner doesn't pay. Corruption is relatively low in Sweden and in this branch I consider it essentially non-existant.
sen 5y ago
The courts/police don't have to pay back any interest made when they seize cash do they? Or appreciated value of products/cars/whatever seized? Seems like a pretty obvious thing to me in this case that any profits made were made after seizure and have nothing to do with the original owner?
- exporectomy 5y ago
  The prosecutor admitted it was a mistake and that she needs more education and won't do it again in future. But also attempted to deny responsibility by pretending she couldn't have known bitcoin value might go up.
Sytten 5y ago
If the government considers the value in crytocurrency for sentences, it will have a hard time justifying that you must pay your capital gain the the fiat currency of the country and not in the crytocurrency in which it was made.
- learc83 5y ago
  If you steal potatoes, the government considers the value of the potatoes when sentencing you. That doesn’t mean that when you make a profit selling potatoes that you can pay your taxes in potatoes.
  - Sytten 5y ago
    This correct, to me that would mean paying taxes when switching between fiat and cryptocurrency which I support as one option. What I dont support is taxing when switching in between crytocurrencies. Which in the analogy would be me exchanging my potatoes for carrots. Imagine if I had to pay taxes on my exchanged potatoes while I didnt make a dime on that.
    - hayd 5y ago
      Is it to stop you paying for your carrots, or your rent (et al), in potatoes.. or trading your potatoes for gold rather than fiat to avoid taxation? Governments are incentivised to force all transactions in terms of fiat. That said, I agree it's frustrating that you are liable for what are unrealised price changes (IMO it's not profit until it's in the bank).
    - eropple 5y ago
      > Which in the analogy would be me exchanging my potatoes for carrots. In the United States and in many other jurisdictions, if you realize a profit through commodity exchange, you owe tax on the fair market value of the exchange.
yarky 5y ago
Does anyone understand the legal logic behind such a risky decision? I mean, if they confiscate an asset, why wouldn't they just hold onto it until the legal process is settled? If it was a car that they confiscated, would they still have the car or would they also need to buy the car today? I am honestly curious as to how this makes any legal sense.
- agency 5y ago
  Yeah this seems weird. If the price of bitcoin had gone down, would he owe the government extra money?
  - viceroyalbean 5y ago
    Yes. It makes sense if you think of it as debt - he had a debt of $137000 and they had seized assets to cover the debt. The assets covered more than the debt so the remainder was paid back. If the assets hadn't covered the debt he would have had to cover it separately.
    - agency 5y ago
      But why would it be a debt? They stripped him of the proceeds of the drug deals: 36 bitcoins. Why is the cash value of those bitcoins at the time of seizure relevant? If they had seized his car, and it depreciated between when they seized and auctioned it, does he owe them the difference too? Why should the legal system treat seized assets as equivalent monetary value debts?
      - viceroyalbean 5y ago
        It's a debt because the way the legal system carried out stripping him of his earnings was to give him a fine equal to the value of the BTC at the time. This was of course a mistake which is why this whole thing blew up, but in practice that's how it was handled.
        5y ago
kevin_thibedeau 5y ago
Just make him pay income tax on the current value.
fancymcpoopoo 5y ago
seems absurd. if you seized someone's ferrari and that ferrari became more valuable would you give them back the difference?
- fancymcpoopoo 5y ago
  in this case if i were sweden i would say we "lost" the $1.6
  - ClumsyPilot 5y ago
    Glad you aren't Then wonder what happened to law and order
- keithnz 5y ago
  that's why you seize the Ferrari, it seems they instead, hey, you have a Ferrari worth 100k, you now owe us 100k and will sell the Ferrari to get that 100k, and then they sell it and get 200k, you now have to give them the 100k because you only asked for the 100k, not the Ferrari. As they say in the article, next time, if they seize 36 bitcoin, then you have to give up 36 bitcoin, not the dollar value they are worth at the time.
ekianjo 5y ago
> Because crypto transactions, which are recorded on the blockchain, are untraceable by governments and other central authorities like banks Erm, no, that's not how the blockchain transactions work. you can see everything. It's an open ledger.
- IncRnd 5y ago
  What people really mean in these cases is redacted not untraceable.
- rtkwe 5y ago
  They can't be easily traced to a particular person is what they mean. Detached from names it's largely meaningless like an encrypted chat, technically the data's all there but it needs other data to be usefully tracked.
  - ekianjo 5y ago
    > They can't be easily traced to a particular person is what they mean Exchanges typically ask for an ID in most countries these day before you can purchase any crypto. I'd be curious how you avoid detection unless you started very early in crypto by mining on your own. You'd still need an ID to exchange back to fiat anyway.
  - omginternets 5y ago
    It's way easier to correlate activity to a particular person with a blockchain than with traditional banking. There are no administrative hoops to getting access to transaction data.
    - rtkwe 5y ago
      That assumes it's gone through some deanonymizing transaction like with someone who does know your customer compliance. Tumblers still work right?
      - acdha 5y ago
vmception 5y ago
To me the most outstanding question is: are these bitcoin clean? Does a random country’s random procedural gracing make the crypto magically clean again? It was seized, and now its not! So the crypto is clean now! It doesn't matter if you respect that country! Or even that a municipalities civil asset forfeiture process! To me this has been a big hole in Elliptic and Chainanalysis’ business, along with other merchants and exchanges that try to trace crypto origins to determine if the account should be frozen or not. I’m open to opinions on this, but my current thought is that attempting any crypto AML/KYC is a joke, but its great snake oil to sell to exchanges and government agencies. I think crypto accelerates and illuminates the folly of transaction whitelisting/blacklisting.
seibelj 5y ago
Here's a German man who simply refused to give the authorities his password, so he gets to keep his $60 million https://www.theverge.com/tldr/2021/2/5/22268646/german-police-bitcoin-digital-wallet-missing-password https://www.theverge.com/tldr/2021/2/5/22268646/german-polic...
- stef25 5y ago
  https://en.wikipedia.org/wiki/Key_disclosure_law#Germany https://en.wikipedia.org/wiki/Key_disclosure_law#Germany Edit: it says the govt gets to "keep it", not him. If he has the seed to his wallet, is there anything stopping him getting at his coins?
baybal2 5y ago
And there were times when even full blocks of 50btc were just gifted around
isodev 5y ago
Or… Sweden could just choose not to do anything. It’s make believe money after all.
- akaij 5y ago
  Things have value because we say so. How else can you explain the worth of a $100 banknote being higher than the paper and the ink it's made of? Bitcoin is the same. All money is make-believe.
  - isodev 5y ago
    You are right, $100 have value because people have an agreement that it does. This is not the case for Bitcoin… there are folks who wish it were. It’s like saying “from today on, I can buy stuff with emojis”. Even Monopoly money go back in the box at the end of the day.
    - akaij 5y ago
      A quick glance at any exchange disproves this. The common agreement right now is that a single Bitcoin has ~$50000 value.
  - colinmhayes 5y ago
    It's not quite so simple. Government backed money has some intrinsic value because if you don't have any the government will put you in jail for not paying taxes. The IRS does not accept crypto. You can also get into "everything is make believe" easily enough, so this isn't very helpful either way.
    - yrral 5y ago
      The IRS does not accept cash either. And the process of converting your cash into bits that the IRS accepts ends up being the same process as converting your crypto into bits that the IRS accepts.
      - 5y ago
kristianov 5y ago
Sweden government could just issue their shitcoin and make up the exchange rate with Bitcoin.
bhawks 5y ago
If someone sold drugs for rare artwork, would the government keep the artwork? Would they sell it? What if during trial a museum burns down and now this is the last painting buy the artist and the value skyrockets. Should the government let the person get a portion of that value? If someone sold drugs for cash, and used the cash to buy a lottery ticket - should the government demand the cash or the ticket? What if the ticket ends up winning? If someone sold drugs in addition to a legal business and invests all the profits into the SP500 should the government take the entire stock portfolio? A percentage equal to the amount of dirty money put in? What if the person appeals and wins after the asset has been liquidated? How do you make that person whole again? Do you? I can't believe this problem hasn't been figured out before crypto. Tbh it probably has, but because it's Bitcoin we will write an article about it.
- bhawks 5y ago
  Ah yes there is actually: https://www.justice.gov/criminal-afmls/file/839521/download?ved=2ahUKEwjqmPq_7sjyAhVyHjQIHW0oB54QFnoECCcQAQ&usg=AOvVaw26jvTgn3R27n7Qi9v8ZTgw https://www.justice.gov/criminal-afmls/file/839521/download?... It covers crypto, real estate, stocks, and a bunch of other things explicitly.
  - crazysim 5y ago
    Page 29 is the relevant page to this situation.
- Grustaf 5y ago
  > If someone sold drugs in addition to a legal business and invests all the profits into the SP500 should the government take the entire stock portfolio? Why would the seize the entire portfolio?
  - dwild 5y ago
    Who knows? All the legal business profit may have been lost on short over Gamestop?
devoutsalsa 5y ago
Imagine the opposite scenario where Bitcoin crashed by 100K USD, and they came back saying "sorry, your stuff devalued, you still owe us 100K."
- zaidf 5y ago
  None of this would matter if the government didn't touch seized assets until the legal process is over. This is especially easy to do with digital coins (vs. say a room full of furniture which could incur not-so-insignificant storage costs.)
  - maverwa 5y ago
    As far as I understand the article, thats should not matter in this case. They did not "touch" the coins to cause this problem. They just recorded their value in SEK instead the raw number of BTC so when the process was over, they had to pay back the difference between what they sized originally (36 BTC, 1.3mio SEK a few years/months ago) and what they wrote down in their records (1.3 mio SEK or ~3 BTC nowadays). The same might happen for every other "foregin" currency, right?
- zaarn 5y ago
  I don't think this would be the case. The government seized "X SEK" of BTC. The government auctioned those BTC off at the end, like they would anything else, and there was BTC left over after that, I don't think there should be any reason why it shouldn't be returned to the proper owner after that. This wasn't part of a fine, rather, they simply took the BTC as part of the drug money, so it's not like the government could argue that if it lost value they should be owed the remainder.
dusted 5y ago
This is just Sweden trying to do the wrong thing again. His earnings on illicit activity was 36 bitcoin, so 36 bitcoin is what should be seized.
- emoII 5y ago
  Yes, and that is exactly what the prosecutor says she should have done in retrospect.
- danuker 5y ago
  > wrong thing again I lost trust in the Swedish justice system when they reopened Assange's rape trial. https://www.bbc.com/news/world-europe-48253343 https://www.bbc.com/news/world-europe-48253343
iamwil 5y ago
How did they seize his Bitcoin? I'm guessing it was sitting on an exchange? Did they coerce him into giving up his private keys?
kiranp 5y ago
This is the most bull case for bitcoin.
eh9 5y ago
How much should I trust nypost?
bhawks 5y ago
> Because crypto transactions, which are recorded on the blockchain, are untraceable by governments and other central authorities like banks, they’re often the preferred payment among ransomware hackers and other criminals. And literally two paragraphs above that: > The prosecutor added that the case was the first in the country’s legal history in which cryptocurrency was seized, so there was no legal precedent to look toward. The preferred payment method of crime that has never been encountered by legal authorities in one of the most developed countries in the world. Very interesting.
cm2187 5y ago
A similar story happened with Mt Gox, which was insolvent at the time of its bankruptcy: Those 200,000 Bitcoins he found have sat untouched since he found them. The bankruptcy case restricts him from touching them but since 2014 when Mt. Gox filed for bankruptcy, the price of Bitcoin has skyrocketed. At the time of this recording it’s now worth over $10,000 per Bitcoin. Mt. Gox owes their creditors 450 million dollars which is what the Japanese courts have locked in as what he owes. But his 200,000 Bitcoins are now worth two billion dollars. If he were to pay off all his creditors today, he may then get to walk away with over one billion dollars. [1] [1] https://darknetdiaries.com/transcript/9/ https://darknetdiaries.com/transcript/9/
filleokus 5y ago
This was just a silly misstake by the prosecutor, obviously the seizure should had been specified in BTC, not SEK. A similar (but opposite) thing happened in a civil case during the 90's [0] where a transport company delivered oil to a refinery in Sweden. The oil producer sued the transport company, and asked the Swedish government to seize the payment for the oil (denominated in dollars). The Swedish government seized 3M USD, but immediately exchanged it for SEK. During the court case, the SEK was devalued by ≈ 17%. In the end when the case was resolved and the seizure was released, the transport company sued the government because they wanted their 3M USD back, not 17 percent less. The transport company won and the government had to pay them 3M USD back. [0]: https://lagen.nu/dom/nja/1990s137 https://lagen.nu/dom/nja/1990s137
- setgree 5y ago
  The prosecutor might have bet that BTC was a risky asset/fad, which would make it safer to ‘bill’ the defendant in SEK. If this had happened, I would not expect them to be forthright about it.
  - TheJoeMan 5y ago
    Could you imagine having your assets seized, then 4 years later getting a bill from a Judge because those assets *depreciated*? In either case the seizure should have been denominated in BTC if BTC is what was taken.
- moss2 5y ago
  BTC is not recognized as a legal currency in Sweden so the prosecutor acted correctly.
  - filleokus 5y ago
    Hmm. In Swedish media the prosecutor has conceded that it was a misstake and that it was done due to lack of expertise about crypto currency [0]. I'm guessing that it's fairly common that prosecutors "förverkar" regular goods (like watches/jewellery/cars) in similar ways, where they claim the physical thing and not the monetary value. BTC and other crypto should probably be treated in this way. [0]: https://www.dagensjuridik.se/nyheter/aklagartabbe-gjorde-knarklangare-till-miljonarer/ https://www.dagensjuridik.se/nyheter/aklagartabbe-gjorde-kna...
petters 5y ago
Hopefully the tax authorities takes half of it, but $800k clean money is pretty sweet for a couple of years in jail of you are a criminal. Hope they owe the amount to someone.
Grustaf 5y ago
That's nothing, another Swedish court just awarded a convicted torturer-rapists 80 grand because he claims he was 17 when he committed the crimes, so the short prison sentence he received wasn't quite short enough, hence he deserves damages.
heavenlyblue 5y ago
Using proceeds of the crime is considered money laundering, otherwise I could sell drugs, invest that money in stock and then get completely “white” money on how much the stock had soared. How is Bitcoin different? If I buy a rare car from cocaine money does that mean that if they sell for more money than I paid for it I get the money back?

200 points by djoldman 5y ago

Seems logical? The steward of illegal gains,should keep the legal gains of the illegal fortune before the government.

It's an interesting question. In the more classic sense, what proceeds should be stripped if you get cash in exchange for drugs and use that cash to buy GME calls which skyrocket? On the one hand it's all "blood money" / tainted, but the actual proceeds at the time of the crime have a specific value.

collectedparts 5y ago
> “The lesson to be learned from this is to keep the value in bitcoin, that the profit from the crime should be 36 bitcoin, regardless of what value the bitcoin has at the time,” [the prosecutor] reportedly said. It sounds like the police tripped a loophole in law by liquidating some of the BTC. Sounds like if the police had HODL'd they'd have been fine defending it as just look, these were the assets he had, we seized them. But since they liquidated, the defense got to say, hey, you already got the full proceeds.
- thisiswater 5y ago
  My interpretation of the article is that the court recognized the proceeds in terms of Swedish Kroner at the time that the BTC were seized, so was unable to account for the increasing value of BTC in terms of Kroner - they had not legally seized ~$1.7m, they had legally seized $137,000, and so had to pay back the difference. From the article - "The lesson to be learned from this is to keep the value in bitcoin, that the profit from the crime should be 36 bitcoin, regardless of what value the bitcoin has at the time".
  - est31 5y ago
    In fact it makes it seem the fault of the prosecutor even and not the court. Quotes from the prosecutor from the Telegraph article. > "It has led to consequences I was not able to foresee at the time." > "I think we should probably invest in an internal education in the [prosecution] authority, as cryptocurrency will be a factor we'll be dealing with to a much greater extent than we are today. The more we increase the level of knowledge within the organization, the fewer mistakes we will make." I'm not familiar with the swedish legal system (and not a lawyer), but often you can only be convicted for things the prosecution requests/accuses you of. Otherwise you can't defend yourself in court. So the prosecution ordered the bitcoin to be seized as proceeds of the crime, but not in a correct way, so the court ruling contained the same wording that a specific value in swedish Kronen shall be seized. Had the prosecution demanded the seizure in terms of Bitcoin instead, the court would probably have approved it too. However, at this point it's too late to change the ruling. Courts exist to settle things, and one can't simply re-roll a prosecution case unless there were grave mistakes.
    - ClumsyPilot 5y ago
      I think you interpretation is accurate - the prosecution can decide if it's seizing assets or cash, either choice has consequences.
- deleted 5y ago
  [deleted]
- viceroyalbean 5y ago
  It's not that the police liquidated the BTC, it's that the argument that was made in court was for the current cash value of the BTC. Instead of arguing that the value of the crime was 36 bitcoin the prosecutor argued that if was $137000 which was equivalent at the time. One interesting consequence is that the drug dealer would have had to pay the difference if bitcoin had dropped in value instead of rising.
  - elcritch 5y ago
    As an American it's a bit surprising to me that Sweden actually follows the quaint notion of justice and rule of law. Sounds like they even require property taken to be specifically listed and related to a crime as proven in a court of law. In the US authorities would've likely been able to keep all the BTC, and also could've seized the drug dealers home and car if they had any. In Florida (and many other states) it was/is common practice that any excuse police made could be used to seize almost any of a person's property, essentially on the spot. Generally without even needing to arrest the person or charge them with a crime or get a warrant. Just based on "suspicion" on the cops behalf. Thank good Ole "rule of law" President Reagan and the war on drugs for that one. See: - https://cplaw-miami.com/police-seize-your-property-without-arrest/ https://cplaw-miami.com/police-seize-your-property-without-a... - https://www.vox.com/policy-and-politics/2017/12/1/16686014/phillip-parhamovich-civil-forfeiture https://www.vox.com/policy-and-politics/2017/12/1/16686014/p... - https://en.m.wikipedia.org/wiki/Comprehensive_Crime_Control_Act_of_1984 https://en.m.wikipedia.org/wiki/Comprehensive_Crime_Control_...
    - danuker 5y ago
      > Just based on "suspicion" on the cops behalf. It's fine, the dog jumped at the window of your stopped car. https://en.wikipedia.org/wiki/Detection_dog#Civil_rights https://en.wikipedia.org/wiki/Detection_dog#Civil_rights
  - zaarn 5y ago
    I don't think the dealer would have to pay the difference in value if it lost value. Otherwise, you'd have to pay for the loss in value of a seized car if it's sold only years later or the loss in value of gold bars seized if the market on those crashed in the meantime.
jsmeaton 5y ago
If you use the proceeds of crime to buy a house then can't that house be seized (jurisdictions probably have different rules, but..)? The house is then auctioned off. It's not valued at the time of arrest and any additional value returned to the person arrested. I don't understand why it could, or should, be any different for electronic stores of value (stock, options, crypto).
- Blikkentrekker 5y ago
  Simply because the legal paperwork listed the value in Swedish crowns rather than in bitcoins. As I understand this article, the same would have happened if the legal paperwork listed the value of the house in crowns, and then the housing market rose and the house tripled in value. The only unusual thing with Bitcoins, is that the value thereof has risen to quite extreme proportions.
  - jsmeaton 5y ago
    Oh, I understand why it's happened in this particular case. It's a loophole they'll be closing for sure. My comments were directed at the parent: > what proceeds should be stripped if you get cash in exchange for drugs and use that cash to buy GME calls which skyrocket? > but the actual proceeds at the time of the crime have a specific value The specific value at the time is, in nearly every other situation, irrelevant. The mistake was putting a claim to a monetary value of *asset* rather than the *asset* itself.
irjustin 5y ago
It sounds like in Sweden you can only strip the value of asset (value in Swedish Krona, I imagine) related to the crime directly not the asset class itself. A guess at why it's like that would be - people flow value of drugs/illicit goods, rarely holding the value for long. This means the prosecutor wants to set an amount for "all drug deals they can convict for" and then try to seize that value. Clearly before crypto the only thing that would wildly fluctuate vs the country's currency is stocks. No one's doing drug deals in stocks so the law was written in value. If they did seize things like stocks it's clear they had a process to sell the liquid asset (they tried to sell the BTC), but they couldn't get their ducks in order to sell it, haha. I'm sure there's going to be a change to the law to seize the asset as a whole instead of pegging it to some particular value.
- glenngillen 5y ago
  I guess the flip side to this has historically played in the favour of the authorities. Ill-gotten gains would be laundered through a casino where you’d turn it all over over the course of several hours playing a game with a low house edge. You’d lose a bit to the house, but now have some potential legitimacy to how you have the funds. I assume under this approach the authorities would have claimed the full amount you started with and not what you were now left with. Crypto just happens to have been a casino where people have been winning.
- yxhuvud 5y ago
  They can do either, but they have to actually decide what they do. In this partivular case their was no established best practise of how to do, and the choice that was made backfired. They will alter their behaviour.
vmception 5y ago
Is it an interesting question? That prosecutor’s department in that country booked the value in fiat at the time and didn't have a mechanism for booking the value in the asset. People have been saying they have their own nexus currencies for the whole last decade, and others spent too much time ignoring that in. Now it bit Sweden in the ass, for now.
- fastball 5y ago
  It's interesting (to me), because of the whole idea that crypto are in fact cryptocurrencies. So unlike buying a house or buying stock options, the argument can be made that the crypto is itself the medium of exchange and therefore the value in fiat is irrelevant. But this also means that if the crypto drops in price while the cops are HODLing it, they lose out.
  - vmception 5y ago
    agreed on that point my question is whether we should consider these crypto clean, or whether we should stop trying to determine if crypto provenance is clean or not as it doesn't seem possible to rely on the due process of every municipality worldwide, unless the state is deemed as the crypto washer - magically cleaning all crypto as it temporarily seizes and auctions them or returns them - in which case a state will take advantage of that
  - ClumsyPilot 5y ago
    The idea is to take away oroceeds of crime, not to make bank
    - vmception 5y ago
      Tell that to every municipality in the US over the last 20 years

human 5y ago

I guess HODL was easier while in jail.

jp0d 5y ago

Why did the Swedish govt buy so much drugs? #joke

dimeatree 5y ago

This article is way too focused on him being a drug-dealer.

deleted 5y ago
[deleted]

tantalor 5y ago

What would happened if the value had dropped in that time?

dylan604 5y ago
You give them the full BTC in return even if you have to buy the coins again. If the value goes up, you cash it out and return what the BTC was valued at the time of seizure and pocket the rest. See, I can play cops and robbers too. However, growing up I thought it was two distinct groups. The cops on one side, and the robbers on the other. As an adult, I see it was just two descriptions of the same group.
pcthrowaway 5y ago
Perhaps they would been liable for making up the difference? Although they could have then argued if the police had liquidated the bitcoin at the time of seizure, there wouldn't have been a loss.

dylan604 5y ago

So, who's going to enforce the gov't follow through? I don't know the intricacies of Sweden's gov't separation of powers and what not, but what kind of recourse is available to force the gov't to do this?

rtkwe 5y ago
In the US if the court really wants to I think it can start tossing government officials in prison for defying court orders for contempt of court. That's a fairly common feature of European courts and their descendants AFAIK. It's a very bad sign when that starts happening though, it's the system starting to fall apart.
wutwutwutwut 5y ago
This will not be an issue for the drug dealer. The part of the government who deals with this is separate from police and prosecutor and is the same organization which helps the electricity company getting their money if the home owner doesn't pay. Corruption is relatively low in Sweden and in this branch I consider it essentially non-existant.

sen 5y ago

The courts/police don't have to pay back any interest made when they seize cash do they? Or appreciated value of products/cars/whatever seized? Seems like a pretty obvious thing to me in this case that any profits made were made after seizure and have nothing to do with the original owner?

exporectomy 5y ago
The prosecutor admitted it was a mistake and that she needs more education and won't do it again in future. But also attempted to deny responsibility by pretending she couldn't have known bitcoin value might go up.

Sytten 5y ago

If the government considers the value in crytocurrency for sentences, it will have a hard time justifying that you must pay your capital gain the the fiat currency of the country and not in the crytocurrency in which it was made.

learc83 5y ago
If you steal potatoes, the government considers the value of the potatoes when sentencing you. That doesn’t mean that when you make a profit selling potatoes that you can pay your taxes in potatoes.
- Sytten 5y ago
  This correct, to me that would mean paying taxes when switching between fiat and cryptocurrency which I support as one option. What I dont support is taxing when switching in between crytocurrencies. Which in the analogy would be me exchanging my potatoes for carrots. Imagine if I had to pay taxes on my exchanged potatoes while I didnt make a dime on that.
  - hayd 5y ago
    Is it to stop you paying for your carrots, or your rent (et al), in potatoes.. or trading your potatoes for gold rather than fiat to avoid taxation? Governments are incentivised to force all transactions in terms of fiat. That said, I agree it's frustrating that you are liable for what are unrealised price changes (IMO it's not profit until it's in the bank).
  - eropple 5y ago
    > Which in the analogy would be me exchanging my potatoes for carrots. In the United States and in many other jurisdictions, if you realize a profit through commodity exchange, you owe tax on the fair market value of the exchange.

yarky 5y ago

Does anyone understand the legal logic behind such a risky decision? I mean, if they confiscate an asset, why wouldn't they just hold onto it until the legal process is settled? If it was a car that they confiscated, would they still have the car or would they also need to buy the car today? I am honestly curious as to how this makes any legal sense.

agency 5y ago
Yeah this seems weird. If the price of bitcoin had gone down, would he owe the government extra money?
- viceroyalbean 5y ago
  Yes. It makes sense if you think of it as debt - he had a debt of $137000 and they had seized assets to cover the debt. The assets covered more than the debt so the remainder was paid back. If the assets hadn't covered the debt he would have had to cover it separately.
  - agency 5y ago
    But why would it be a debt? They stripped him of the proceeds of the drug deals: 36 bitcoins. Why is the cash value of those bitcoins at the time of seizure relevant? If they had seized his car, and it depreciated between when they seized and auctioned it, does he owe them the difference too? Why should the legal system treat seized assets as equivalent monetary value debts?
    - viceroyalbean 5y ago
      It's a debt because the way the legal system carried out stripping him of his earnings was to give him a fine equal to the value of the BTC at the time. This was of course a mistake which is why this whole thing blew up, but in practice that's how it was handled.
      - 5y ago

kevin_thibedeau 5y ago

Just make him pay income tax on the current value.

fancymcpoopoo 5y ago

seems absurd. if you seized someone's ferrari and that ferrari became more valuable would you give them back the difference?

fancymcpoopoo 5y ago
in this case if i were sweden i would say we "lost" the $1.6
- ClumsyPilot 5y ago
  Glad you aren't Then wonder what happened to law and order
keithnz 5y ago
that's why you seize the Ferrari, it seems they instead, hey, you have a Ferrari worth 100k, you now owe us 100k and will sell the Ferrari to get that 100k, and then they sell it and get 200k, you now have to give them the 100k because you only asked for the 100k, not the Ferrari. As they say in the article, next time, if they seize 36 bitcoin, then you have to give up 36 bitcoin, not the dollar value they are worth at the time.

ekianjo 5y ago

> Because crypto transactions, which are recorded on the blockchain, are untraceable by governments and other central authorities like banks Erm, no, that's not how the blockchain transactions work. you can see everything. It's an open ledger.

IncRnd 5y ago
What people really mean in these cases is redacted not untraceable.
rtkwe 5y ago
They can't be easily traced to a particular person is what they mean. Detached from names it's largely meaningless like an encrypted chat, technically the data's all there but it needs other data to be usefully tracked.
- ekianjo 5y ago
  > They can't be easily traced to a particular person is what they mean Exchanges typically ask for an ID in most countries these day before you can purchase any crypto. I'd be curious how you avoid detection unless you started very early in crypto by mining on your own. You'd still need an ID to exchange back to fiat anyway.
- omginternets 5y ago
  It's way easier to correlate activity to a particular person with a blockchain than with traditional banking. There are no administrative hoops to getting access to transaction data.
  - rtkwe 5y ago
    That assumes it's gone through some deanonymizing transaction like with someone who does know your customer compliance. Tumblers still work right?
    - acdha 5y ago

vmception 5y ago

To me the most outstanding question is: are these bitcoin clean? Does a random country’s random procedural gracing make the crypto magically clean again? It was seized, and now its not! So the crypto is clean now! It doesn't matter if you respect that country! Or even that a municipalities civil asset forfeiture process! To me this has been a big hole in Elliptic and Chainanalysis’ business, along with other merchants and exchanges that try to trace crypto origins to determine if the account should be frozen or not. I’m open to opinions on this, but my current thought is that attempting any crypto AML/KYC is a joke, but its great snake oil to sell to exchanges and government agencies. I think crypto accelerates and illuminates the folly of transaction whitelisting/blacklisting.

seibelj 5y ago

Here's a German man who simply refused to give the authorities his password, so he gets to keep his $60 million https://www.theverge.com/tldr/2021/2/5/22268646/german-police-bitcoin-digital-wallet-missing-password https://www.theverge.com/tldr/2021/2/5/22268646/german-polic...

stef25 5y ago
https://en.wikipedia.org/wiki/Key_disclosure_law#Germany https://en.wikipedia.org/wiki/Key_disclosure_law#Germany Edit: it says the govt gets to "keep it", not him. If he has the seed to his wallet, is there anything stopping him getting at his coins?

baybal2 5y ago

And there were times when even full blocks of 50btc were just gifted around

isodev 5y ago

Or… Sweden could just choose not to do anything. It’s make believe money after all.

akaij 5y ago
Things have value because we say so. How else can you explain the worth of a $100 banknote being higher than the paper and the ink it's made of? Bitcoin is the same. All money is make-believe.
- isodev 5y ago
  You are right, $100 have value because people have an agreement that it does. This is not the case for Bitcoin… there are folks who wish it were. It’s like saying “from today on, I can buy stuff with emojis”. Even Monopoly money go back in the box at the end of the day.
  - akaij 5y ago
    A quick glance at any exchange disproves this. The common agreement right now is that a single Bitcoin has ~$50000 value.
- colinmhayes 5y ago
  It's not quite so simple. Government backed money has some intrinsic value because if you don't have any the government will put you in jail for not paying taxes. The IRS does not accept crypto. You can also get into "everything is make believe" easily enough, so this isn't very helpful either way.
  - yrral 5y ago
    The IRS does not accept cash either. And the process of converting your cash into bits that the IRS accepts ends up being the same process as converting your crypto into bits that the IRS accepts.
    - 5y ago

kristianov 5y ago

Sweden government could just issue their shitcoin and make up the exchange rate with Bitcoin.

bhawks 5y ago

If someone sold drugs for rare artwork, would the government keep the artwork? Would they sell it? What if during trial a museum burns down and now this is the last painting buy the artist and the value skyrockets. Should the government let the person get a portion of that value? If someone sold drugs for cash, and used the cash to buy a lottery ticket - should the government demand the cash or the ticket? What if the ticket ends up winning? If someone sold drugs in addition to a legal business and invests all the profits into the SP500 should the government take the entire stock portfolio? A percentage equal to the amount of dirty money put in? What if the person appeals and wins after the asset has been liquidated? How do you make that person whole again? Do you? I can't believe this problem hasn't been figured out before crypto. Tbh it probably has, but because it's Bitcoin we will write an article about it.

bhawks 5y ago
Ah yes there is actually: https://www.justice.gov/criminal-afmls/file/839521/download?ved=2ahUKEwjqmPq_7sjyAhVyHjQIHW0oB54QFnoECCcQAQ&usg=AOvVaw26jvTgn3R27n7Qi9v8ZTgw https://www.justice.gov/criminal-afmls/file/839521/download?... It covers crypto, real estate, stocks, and a bunch of other things explicitly.
- crazysim 5y ago
  Page 29 is the relevant page to this situation.
Grustaf 5y ago
> If someone sold drugs in addition to a legal business and invests all the profits into the SP500 should the government take the entire stock portfolio? Why would the seize the entire portfolio?
- dwild 5y ago
  Who knows? All the legal business profit may have been lost on short over Gamestop?

devoutsalsa 5y ago

Imagine the opposite scenario where Bitcoin crashed by 100K USD, and they came back saying "sorry, your stuff devalued, you still owe us 100K."

zaidf 5y ago
None of this would matter if the government didn't touch seized assets until the legal process is over. This is especially easy to do with digital coins (vs. say a room full of furniture which could incur not-so-insignificant storage costs.)
- maverwa 5y ago
  As far as I understand the article, thats should not matter in this case. They did not "touch" the coins to cause this problem. They just recorded their value in SEK instead the raw number of BTC so when the process was over, they had to pay back the difference between what they sized originally (36 BTC, 1.3mio SEK a few years/months ago) and what they wrote down in their records (1.3 mio SEK or ~3 BTC nowadays). The same might happen for every other "foregin" currency, right?
zaarn 5y ago
I don't think this would be the case. The government seized "X SEK" of BTC. The government auctioned those BTC off at the end, like they would anything else, and there was BTC left over after that, I don't think there should be any reason why it shouldn't be returned to the proper owner after that. This wasn't part of a fine, rather, they simply took the BTC as part of the drug money, so it's not like the government could argue that if it lost value they should be owed the remainder.

dusted 5y ago

This is just Sweden trying to do the wrong thing again. His earnings on illicit activity was 36 bitcoin, so 36 bitcoin is what should be seized.

emoII 5y ago
Yes, and that is exactly what the prosecutor says she should have done in retrospect.
danuker 5y ago
> wrong thing again I lost trust in the Swedish justice system when they reopened Assange's rape trial. https://www.bbc.com/news/world-europe-48253343 https://www.bbc.com/news/world-europe-48253343

iamwil 5y ago

How did they seize his Bitcoin? I'm guessing it was sitting on an exchange? Did they coerce him into giving up his private keys?

kiranp 5y ago

This is the most bull case for bitcoin.

eh9 5y ago

How much should I trust nypost?

bhawks 5y ago

> Because crypto transactions, which are recorded on the blockchain, are untraceable by governments and other central authorities like banks, they’re often the preferred payment among ransomware hackers and other criminals. And literally two paragraphs above that: > The prosecutor added that the case was the first in the country’s legal history in which cryptocurrency was seized, so there was no legal precedent to look toward. The preferred payment method of crime that has never been encountered by legal authorities in one of the most developed countries in the world. Very interesting.

cm2187 5y ago

A similar story happened with Mt Gox, which was insolvent at the time of its bankruptcy: Those 200,000 Bitcoins he found have sat untouched since he found them. The bankruptcy case restricts him from touching them but since 2014 when Mt. Gox filed for bankruptcy, the price of Bitcoin has skyrocketed. At the time of this recording it’s now worth over $10,000 per Bitcoin. Mt. Gox owes their creditors 450 million dollars which is what the Japanese courts have locked in as what he owes. But his 200,000 Bitcoins are now worth two billion dollars. If he were to pay off all his creditors today, he may then get to walk away with over one billion dollars. [1] [1] https://darknetdiaries.com/transcript/9/ https://darknetdiaries.com/transcript/9/

filleokus 5y ago

This was just a silly misstake by the prosecutor, obviously the seizure should had been specified in BTC, not SEK. A similar (but opposite) thing happened in a civil case during the 90's [0] where a transport company delivered oil to a refinery in Sweden. The oil producer sued the transport company, and asked the Swedish government to seize the payment for the oil (denominated in dollars). The Swedish government seized 3M USD, but immediately exchanged it for SEK. During the court case, the SEK was devalued by ≈ 17%. In the end when the case was resolved and the seizure was released, the transport company sued the government because they wanted their 3M USD back, not 17 percent less. The transport company won and the government had to pay them 3M USD back. [0]: https://lagen.nu/dom/nja/1990s137 https://lagen.nu/dom/nja/1990s137

setgree 5y ago
The prosecutor might have bet that BTC was a risky asset/fad, which would make it safer to ‘bill’ the defendant in SEK. If this had happened, I would not expect them to be forthright about it.
- TheJoeMan 5y ago
  Could you imagine having your assets seized, then 4 years later getting a bill from a Judge because those assets *depreciated*? In either case the seizure should have been denominated in BTC if BTC is what was taken.
moss2 5y ago
BTC is not recognized as a legal currency in Sweden so the prosecutor acted correctly.
- filleokus 5y ago
  Hmm. In Swedish media the prosecutor has conceded that it was a misstake and that it was done due to lack of expertise about crypto currency [0]. I'm guessing that it's fairly common that prosecutors "förverkar" regular goods (like watches/jewellery/cars) in similar ways, where they claim the physical thing and not the monetary value. BTC and other crypto should probably be treated in this way. [0]: https://www.dagensjuridik.se/nyheter/aklagartabbe-gjorde-knarklangare-till-miljonarer/ https://www.dagensjuridik.se/nyheter/aklagartabbe-gjorde-kna...

petters 5y ago

Hopefully the tax authorities takes half of it, but $800k clean money is pretty sweet for a couple of years in jail of you are a criminal. Hope they owe the amount to someone.

Grustaf 5y ago

That's nothing, another Swedish court just awarded a convicted torturer-rapists 80 grand because he claims he was 17 when he committed the crimes, so the short prison sentence he received wasn't quite short enough, hence he deserves damages.

heavenlyblue 5y ago

Using proceeds of the crime is considered money laundering, otherwise I could sell drugs, invest that money in stock and then get completely “white” money on how much the stock had soared. How is Bitcoin different? If I buy a rare car from cocaine money does that mean that if they sell for more money than I paid for it I get the money back?