ScamsNOW!

The SCARS Institute Magazine about Scam Victims-Survivors, Scams, Fraud & Cybercrime

2025 SCARS Institute 11 Years of Service

A Quick Lesson in Asset Forfeiture for Scam Victims

A Commentary on the Process of Recovering Cryptocurrency

Primary Category: Guest Editorial

Author:
Val Harkless, Senior Fraud Analyst/Investigator

About This Article

Cryptocurrency asset forfeiture for scam victims is a challenging process primarily due to limited resources and complex legal procedures. Investigators and agencies face significant hurdles, including a lack of trained personnel, high prosecution thresholds (typically between $300,000 to $500,000), and minimal experience in handling crypto-related investigations.

Asset forfeiture typically falls under three categories: administrative, criminal, and civil judicial, with most major cryptocurrency forfeitures processed through civil judicial actions.

This method does not require a criminal conviction and allows the government to seize assets more effectively, even from criminals outside the U.S. Despite growing efforts and proposed legislation to streamline the process, such as lifting the $500,000 cap for administrative forfeiture, progress remains slow.

The U.S. Treasury Department and law enforcement agencies continue to strategize on combating crypto fraud, including partnerships with private companies for forensic analysis. Meanwhile, educating the public is critical in preventing future victims .

A Quick Lesson in Cryptocurrency Asset Forfeiture for Scam Victims - 2024 - on SCARS Institute ScamsNOW.com - The Magazine of Scams Fraud and Cybercrime

A Guest Editorial: A Quick Lesson in Cryptocurrency Asset Forfeiture for Scam Victims

A SCARS Institute Guest Editorial by Val Harkless, Senior Fraud Analyst/Investigator

This question was asked last week by a victim at the FINRA conference by victims Brian Glick and Jules Peterson. However, it is a question that has been asked many times by victims of crypto crimes especially when their loss is very significant. The best answer is because of RESOURCES. Previously, I worked as a contractor for the FBI’s Asset Forfeiture program for almost a decade. My experience is that this process can be frustrating for investigators, agents, analysts, and victims.

Below are some key points as to the lack of prosecution:

  • Too many victims and not enough staff to conduct crypto investigation searches.
  • Federal agencies have greater priorities and can only handle a select few cases.
  • Some US Attorney’s Offices have placed a minimum threshold to prosecute (usually starting between $300k to $500K to prosecute)
  • Even with the threshold met, they can decline to prosecute in the middle of your case.
  • Local/state law enforcement departments have little to no training and experience with crypto assets/investigations, and the cost of training and Block Explorer licenses (Chainalysis, TRM Labs, QLUE, Elliptic, etc.) are cost prohibitive.
  • It’s just not a priority because they don’t think it’s a big problem.

There are 3 Types of Asset Forfeiture:

Administrative, Criminal, and Civil Judicial. The majority of the major crypto cases that have been successfully prosecuted have been Civil Judicial.

Administrative Forfeiture: Many federal law enforcement agencies are authorized to seize crypto-assets valued at less than or equal to $500,000 at the time of seizure via an admin forfeiture procedure without judicial approval. This is an action against the asset and not a person. If a claim is filed, then the asset must be disposed via criminal forfeiture or civil judicial action.

Criminal Forfeiture: Criminal forfeiture actions are actions against a defendant where only property in which the defendant has a true interest may be forfeited. Note: some crypto forfeiture actions are filed whereas the true owner cannot be identified. Assets totaling $500k or more must be processed via Criminal or Civil Judicial forfeiture.

Civil Judicial Forfeiture: The reason that cryptocurrency forfeitures are processed via the Civil Judicial process is because a legal action is brought against property that was derived from, or used to commit an offense.  No criminal conviction is required, it requires a lower burden of proof and allows the government to reach more property than criminal forfeitures, such as property owned by criminals located outside the U.S. Because Civil judicial forfeiture requires the involvement of the US Attorneys’ Office, it can be difficult to convince them to proceed with prosecution. This is also dependent on the Judicial District and how aggressive they are with prosecuting crypto cases. For example, the District of Massachusetts has been in the news recently with several large-scale disruptions of crypto fraud prosecutions.

Final Thoughts:

In some instances, the investigative agency may be interested in pursuing the case, but may not be able to get a conviction. Need more trained investigators and agencies willing to invest in prioritizing crypto investigations. Future legislation and modification of CAFRA (Civil Asset Forfeiture Reform Act) could make these investigations less complicated to pursue. It’s been suggested previously that law enforcement could contract with private companies that conduct forensic blockchain analysis to support prosecution and to lessen the burden of in-house staff.

Previously, a panelist at The Digital Chamber spoke about how they were brainstorming ways to “enjoin” assets with the cooperation of VASPS [Virtual Asset Service Providers] as part of investigations to aid law enforcement. Additionally, in 2022, the [United States] Attorney General presented a 61-page report citing the intention to lift the $500,000 cap for cryptocurrency and other digital assets to allow them to be processed through Administrative Forfeiture. To date, I do not think this has been implemented. Also, the US Treasury Department submitted a plan to tackle illicit digital currency investigations.

Right now, as investigators we are doing what we can to educate the public to prevent more [scam] victims. I hope this explanation provides insight into the complicated process of recovering [scam] victims’ assets.

References:

(1) The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets, (Pg. 36) https://www.justice.gov/ag/file/1557146/dl?inline

(2) The Digital Chamber https://digitalchamber.org

(3) DOJ Asset Forfeiture Program https://www.justice.gov/afp

(4) Action Plan to Address Illicit Financing Risks of Digital Assets, https://home.treasury.gov/system/files/136/Digital-Asset-Action-Plan.pdf

Please Rate This Article

How useful was this post?

Click on a star to rate it!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.

Since you found this post useful...

Follow us on social media!

We are sorry that this post was not useful for you!

Let us improve this post!

Tell us how we can improve this post?

Please Leave Us Your Comment
Also, tell us of any topics we might have missed.

Leave a Reply

Your comments help the SCARS Institute better understand all scam victim/survivor experiences and improve our services and processes. Thank you

Your email address will not be published. Required fields are marked *

Thank you for your comment. You may receive an email to follow up. We never share your data with marketers.

-/ 30 /-

What do you think about this?
Please share your thoughts in a comment above!

ARTICLE RATING

0
(0)

TABLE OF CONTENTS

META

CATEGORIES

MOST POPULAR COMMENTED ARTICLES

POPULAR ARTICLES

U.S. & Canada Suicide Lifeline 988

WHAT PEOPLE ARE TALKING ABOUT
LATEST SITE COMMENTS

See Comments for this Article at the Bottom of the Page

Important Information for New Scam Victims

Please visit www.ScamVictimsSupport.org – a SCARS Website for New Scam Victims & Sextortion Victims
SCARS Institute now offers a free recovery program at www.SCARSeducation.org
Please visit www.ScamPsychology.org – to more fully understand the psychological concepts involved in scams and scam victim recovery

If you are looking for local trauma counselors, please visit counseling.AgainstScams.org

If you need to speak with someone now, you can dial 988 or find phone numbers for crisis hotlines all around the world here: www.opencounseling.com/suicide-hotlines

Statement About Victim Blaming

Some of our articles discuss various aspects of victims. This is both about better understanding victims (the science of victimology) and their behaviors and psychology. This helps us to educate victims/survivors about why these crimes happened and not to blame themselves, better develop recovery programs, and help victims avoid scams in the future. At times, this may sound like blaming the victim, but it does not blame scam victims; we are simply explaining the hows and whys of the experience victims have.

These articles, about the Psychology of Scams or Victim Psychology – meaning that all humans have psychological or cognitive characteristics in common that can either be exploited or work against us – help us all to understand the unique challenges victims face before, during, and after scams, fraud, or cybercrimes. These sometimes talk about some of the vulnerabilities the scammers exploit. Victims rarely have control of them or are even aware of them, until something like a scam happens, and then they can learn how their mind works and how to overcome these mechanisms.

Articles like these help victims and others understand these processes and how to help prevent them from being exploited again or to help them recover more easily by understanding their post-scam behaviors. Learn more about the Psychology of Scams at www.ScamPsychology.org

SCARS INSTITUTE RESOURCES:

IF YOU HAVE BEEN VICTIMIZED BY A SCAM OR CYBERCRIME

♦ If you are a victim of scams, go to www.ScamVictimsSupport.org for real knowledge and help

♦ Enroll in SCARS Scam Survivor’s School now at www.SCARSeducation.org

♦ To report criminals, visit https://reporting.AgainstScams.org – we will NEVER give your data to money recovery companies like some do!

♦ Sign up for our free support & recovery help by https://support.AgainstScams.org

♦ Join our WhatsApp Chat Group at: https://chat.whatsapp.com/BPDSYlkdHBbDBg8gfTGb02

♦ Follow us on X: https://x.com/RomanceScamsNow

♦ Follow us and find our podcasts, webinars, and helpful videos on YouTube: https://www.youtube.com/@RomancescamsNowcom

♦ SCARS Institute Songs for Victim-Survivors: https://www.youtube.com/playlist…

♦ See SCARS Institute Scam Victim Self-Help Books at https://shop.AgainstScams.org

♦ Learn about the Psychology of Scams at www.ScamPsychology.org

♦ Dig deeper into the reality of scams, fraud, and cybercrime at www.ScamsNOW.com and www.RomanceScamsNOW.com

♦ Scam Survivor’s Stories: www.ScamSurvivorStories.org

♦ For Scam Victim Advocates visit www.ScamVictimsAdvocates.org

♦ See more scammer photos on www.ScammerPhotos.com

You can also find the SCARS Institute on Facebook, Instagram, X, LinkedIn, and TruthSocial

Psychology Disclaimer:

All articles about psychology and the human brain on this website are for information & education only

The information provided in this and other SCARS articles are intended for educational and self-help purposes only and should not be construed as a substitute for professional therapy or counseling.

Note about Mindfulness: Mindfulness practices have the potential to create psychological distress for some individuals. Please consult a mental health professional or experienced meditation instructor for guidance should you encounter difficulties.

While any self-help techniques outlined herein may be beneficial for scam victims seeking to recover from their experience and move towards recovery, it is important to consult with a qualified mental health professional before initiating any course of action. Each individual’s experience and needs are unique, and what works for one person may not be suitable for another.

Additionally, any approach may not be appropriate for individuals with certain pre-existing mental health conditions or trauma histories. It is advisable to seek guidance from a licensed therapist or counselor who can provide personalized support, guidance, and treatment tailored to your specific needs.

If you are experiencing significant distress or emotional difficulties related to a scam or other traumatic event, please consult your doctor or mental health provider for appropriate care and support.

Also read our SCARS Institute Statement about Professional Care for Scam Victims – click here

If you are in crisis, feeling desperate, or in despair, please call 988 or your local crisis hotline.

A Question of Trust

At the SCARS Institute, we invite you to do your own research on the topics we speak about and publish. Our team investigates the subject being discussed, especially when it comes to understanding the scam victims-survivors’ experience. You can do Google searches, but in many cases, you will have to wade through scientific papers and studies. However, remember that biases and perspectives matter and influence the outcome. Regardless, we encourage you to explore these topics as thoroughly as you can for your own awareness.

Leave A Comment

Your comments help the SCARS Institute better understand all scam victim/survivor experiences and improve our services and processes. Thank you

Thank you for your comment. You may receive an email to follow up. We never share your data with marketers.