Crypto Law/Level IV · Holders' traps/4.3 When the state comes/Lesson 2

Seizure and civil forfeiture

How the US government takes crypto, how civil forfeiture can proceed without a criminal charge, and the deadlines that decide whether an owner or victim gets anything back.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

File the free forfeiture claim by the deadline in the notice (no earlier than 35 days after mailing, 18 U.S.C. §983), online via forfeiture.gov; missing it usually means the forfeiture proceeds uncontested.
Owners who substantially prevail in civil forfeiture recover reasonable attorney fees and costs from the United States (28 U.S.C. §2465(b)), which can make hiring a lawyer cheaper overall when a claim is strong.
Crime victims without an ownership claim can petition free for remission under 28 C.F.R. §9.8, ideally within 30 days of receiving notice (28 C.F.R. §9.3), with documented losses and no other compensation.
Gather acquisition records early, since an innocent-owner defense (§983(d)) puts the burden on you; seized property may be held until the case ends (Culley v. Marshall, 2024).

Materials18 U.S.C. §983, the Civil Asset Forfeiture Reform Act proceduresThe US Justice Department’s forfeiture.gov notice site and its claim and petition pages28 CFR §9.8, remission procedures for crime victimsAny notice of seizure letter you have received, with the date it was mailed

Wonder

Can the government take my crypto even if I am never charged with a crime?
How long do I have to fight a seizure, and who has to prove what?
If seized coins were stolen from me, can I get them back?

Explore

Two words are often mixed up. Seizure is the government taking custody of property, for example by serving a warrant on an exchange to lock and transfer an account balance, or by finding the keys to a wallet. Forfeiture is the later legal step that transfers ownership to the government. In the United States, criminal forfeiture follows a conviction (18 U.S.C. §982). Civil forfeiture (18 U.S.C. §981) is a case brought against the property itself, so it can go ahead even if nobody is charged with a crime. Crypto is especially easy to seize once investigators control the keys, because a transfer is final.
In February 2022 US investigators recovered about 94,000 bitcoin stolen in the 2016 hack of the Bitfinex exchange, then worth about $3.6 billion, by decrypting a file of addresses and private keys belonging to Ilya Lichtenstein. He and his wife pleaded guilty to money-laundering charges, and prosecutors recommended that the seized bitcoin be returned to Bitfinex. The case shows both sides of seizure: the coins became recoverable only because the keys were found, and seized property is not automatically the government’s to keep if an identifiable victim has a stronger claim.
Scale has grown. In October 2025 US prosecutors in New York charged Chen Zhi, founder of Cambodia’s Prince Group, over alleged scam compounds running investment-fraud schemes (lesson 4.2.1), and said about 127,271 bitcoin, worth over $14 billion, was held by the US government, which they called the largest bitcoin seizure ever. What happens to such coins matters: Executive Order 14233 of March 6, 2025 created a Strategic Bitcoin Reserve from bitcoin finally forfeited to the Treasury, but only coins not needed for statutory purposes or returned, for example to identifiable and verifiable victims of crime. Anyone with a claim to such coins has to follow the case on the court docket.
The deadlines are the trap. Under 18 U.S.C. §983, in a non-judicial (agency) forfeiture the government must send written notice no later than 60 days after seizure, subject to extensions. An owner who wants to contest must file a claim by the deadline in the notice letter, which may not be earlier than 35 days after mailing; if the letter never arrives, 30 days after final publication of the notice. Notices are published online at forfeiture.gov. Once a claim is filed, the government has 90 days to file a court complaint or return the property. Miss the claim deadline and the forfeiture usually goes ahead uncontested.
In court the government must show by a preponderance of the evidence, meaning more likely than not, that the property is subject to forfeiture. An owner can raise the innocent-owner defense in §983(d), but carries the burden of proving it, also by a preponderance. Waiting is part of the cost: in Culley v. Marshall, decided May 9, 2024, the US Supreme Court held that due process requires a timely forfeiture hearing but not a separate preliminary hearing on whether the government may keep property in the meantime. Seized property can therefore be held until the case is decided, which may take months or years.
Victims have another route. Under 28 CFR §9.8, victims of the offense behind a forfeiture who lack a present ownership interest can petition the Justice Department for remission, a payment from the forfeited property. forfeiture.gov explains the difference: a claim contests the forfeiture in court; a petition asks the agency for remission or mitigation without contesting it. A practical check if a notice arrives: write down the mailing date and the deadline, decide early whether to claim or petition, gather records showing how and when you acquired the assets, and talk to a lawyer. Other countries run their own seizure and freezing regimes with different rules.

Key facts

Civil forfeiture under 18 U.S.C. §981 is a case against property and does not require anyone to be charged with a crime.
In an agency forfeiture, 18 U.S.C. §983 requires the government to send notice no more than 60 days after seizure, subject to extensions.
A claim deadline in a forfeiture notice letter may not be earlier than 35 days after the letter is mailed.
After a claim is filed, the government has 90 days to file a forfeiture complaint or return the property, unless a court extends the time.
In Culley v. Marshall (May 9, 2024) the US Supreme Court held that due process does not require a separate preliminary hearing in civil forfeiture.
Executive Order 14233 of March 6, 2025 funds the Strategic Bitcoin Reserve with finally forfeited bitcoin not needed for statutory purposes or returned to victims.

Exercise nine, six, three, one

9CollectList up to 9 places or forms in which you or someone you know holds crypto, such as an exchange account, a hardware wallet, a phone wallet, or coins held by a lending platform.

6ClusterSort them into 6 categories: exchange accounts, custodial apps, hardware wallets, software wallets, written seed backups, and records held by others.

3DistillReduce the 6 categories to 3 groups: holdings a warrant to a company could reach, holdings reachable only by finding keys or devices, and records that would prove lawful ownership.

1CrystallizeWrite 1 sentence stating what you would do in the first week after receiving a notice of seizure, given the deadlines in 18 U.S.C. §983.

Fact check

Dates, figures and claims checked against the published sources listed below.

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