Seizure of bitcoins
Publication date 24-04-2019, 11:07
The Court of Appeal of The Hague, dated 24 October 2018, seizure of bitcoins: ECLI:NL:GHDHA:2018:2821
In a criminal case, the Dutch Public Prosecution Service has had to return a large amount of bitcoins as it could not be proven that these had been ‘mined’ via stolen electricity. The Court of Appeal rules that in respect of the return in principle the value of the bitcoin at the time of the seizure is decisive. In this matter, 157,000 euros had to be returned, the value of the Bitcoin at the moment of seizure. While the amount would have been 3.3 million euros, had the exchange rate upon the moment of the return of the bitcoins been decisive.
The suspect mined bitcoins using equipment that was generated with stolen electricity. The computer that had been seized on 18 February 2014 was found to have a bitcoin wallet. The first investigation into the computer on 20 February 2014 showed that the wallet had a balance of 127 bitcoins. Further investigation on 23 October 2014 and following synchronisation with the bitcoin network showed that the wallet turned out to have a much higher balance, namely a total of 712 bitcoins. These 712 bitcoins are subsequently seized and sold of by the Public Prosecution’s Service on 24 October 2014.
The Court of Appeal establishes that the suspect has mined a total of 127 bitcoins during the period in which the electricity was stolen. These are confiscated. The Court of Appeal cannot establish a relationship between the other 585 bitcoins that had been seized and the theft of electricity and ordered for these to be returned to the suspect.
Upon calculating the value of the 127 forfeited bitcoins, the Court of Appeal starts with the basic premise that the value of the bitcoin is as it was at the time of the actual moment of seizure. The Court of Appeal sets the exact moment of valuation in the present case at one week after the seizure of the computer. This one week is considered to be a reasonable period for an investigation into the computer and for the disposing of the bitcoins, thus the Court of Appeal. Subsequently, the Court of Appeal derives the value at that moment in time (date seizure + 1 week) from ‘publicly available (internet) sources’, taking into account the average value on that day. In this case, this was about 500 euros per bitcoin. Meaning that 127 bitcoins with a counter value of approximately 63,500 euros are to be forfeited.
The 585 bitcoins that have to be returned were not seized and actually removed from the control of the seized party until October. As those bitcoins had been disposed of very shortly afterwards, the amount that the disposing actually generated is taken as a point of reference for calculating the value of those 585 bitcoins: approximately 270 euros for each bitcoin.