Author: jk, Odaily Planet Daily
Editor: Hao Fangzhou
Since 2018, U.S. and UK law enforcement agencies have confiscated over $40 billion in cryptocurrency assets in more than ten major cases. However, in the vast majority of cases, victims have yet to receive a penny. The digital assets that should have been returned to victims have quietly flowed into government treasuries, strategic reserves, and law enforcement operational budgets.
This article reviews several typical cases, revealing this hidden secondary plundering.
Are you curious where the confiscated money goes?
In traditional criminal justice, confiscating criminal proceeds aims to deprive criminals of illegal gains and, where possible, compensate victims. However, when law enforcement targets cryptocurrencies, this logic no longer holds.
Current U.S. regulations (federally, the maximum compensation for victims is set at the “fair market value on the date of loss”). This means: if a victim lost 10 BTC when Bitcoin was worth $5,000 each, even if the government holds the original coins worth millions, the victim can only claim $50,000. The huge premium from price increases legally belongs to the government.
UK law is similarly “overbearing.” Under the Asset Recovery Incentive Scheme (ARIS), 50% of confiscated assets go to law enforcement officers and prosecutors involved, while the other 50% is handed over to the Home Office. Independent victim compensation channels receive far less, and the application process is complicated and has high thresholds.
In March 2025, U.S. President Trump signed an executive order establishing a “Strategic Bitcoin Reserve,” requiring the Treasury to retain rather than sell confiscated Bitcoin. This further strengthens the government’s retention motive, blocking potential recovery paths for victims at the institutional level.
Typical Cases: Where Does the Money Flow?
UK: The Sun Zhiming Case, the Largest Single Cryptocurrency Confiscation in the World
This is the largest single cryptocurrency seizure to date globally. In October 2018, London’s Economic Crime Command raided multiple properties, seizing about 61,000 BTC. At the time, worth approximately £305 million, by the end of the trial, the value had risen to about £5.5 billion (around $7.2 billion).
Defendant Jian Wen (dual Chinese-British nationality, 42) acted as a money laundering intermediary for these bitcoins and was convicted in March 2024, sentenced to 6 years and 8 months. The mastermind, Qian Zhiming (Chinese citizen, 47), founder of China’s “Blue Sky Grey,” ran a scam from 2014 to 2017, promising high returns and defrauding over 128,000 Chinese elderly investors, involving over $5.6 billion. She was arrested in April 2024, pleaded guilty in September 2025, and was sentenced in November to 11 years and 8 months.
Blue Sky Grey company annual meeting
What about the victims? 128,000 victims, all Chinese citizens, many of whom are retired elderly, poured their life savings into buying assets from the company, dreaming of getting rich quick. Even during liquidation and compensation, this hope persisted. However, both the UK and Chinese governments claim sovereignty over these bitcoins, and civil recovery is still ongoing. Legal experts admit that, due to sovereignty disputes, the likelihood of victims receiving compensation is very low. China has begun collecting victim information, but how many will ultimately be compensated, whether the amount will be equivalent to the original or include Bitcoin’s appreciation, or whether all funds will remain with UK law enforcement—these are all unknowns.
Funds flow: UK Treasury (expected). Actual victim compensation: zero, but case ongoing.
US: The Silk Road Case, $3 Billion in “Unclaimed Wealth”
Silk Road was the most notorious dark web drug marketplace. Its founder, Ross Ulbricht, was arrested in 2013, and the platform’s massive Bitcoin stash was gradually seized.
In November 2021, IRS-CI recovered 51,680 BTC from a safe deposit box in Georgia, worth over $3.36 billion. Zhong (32, Georgia resident) had stolen these coins in 2012 using system vulnerabilities and had hidden them for nearly a decade. In April 2023, he was sentenced to one year and one day in prison.
Since Silk Road was an illegal platform, courts found no “legitimate victims,” and both batches of confiscated assets went directly to the government. In December 2024, a federal judge dismissed a claim by an investment firm, clearing the way for government disposal of the assets. Under the 2025 Strategic Bitcoin Reserve executive order, these assets may be permanently held by the Federal Reserve.
Funds flow: U.S. Treasury Strategic Bitcoin Reserve. Actual victim compensation: zero.
Prince Group / Huione / Chen Zhi Case, $15 Billion Pending
On October 14, 2025, the U.S. Department of Justice Eastern District filed a public indictment in New York against Chen Zhi (also known as Vincent, 37, Cambodian nationality), founder and chairman of Cambodia’s Prince Holding Group, charging conspiracy to commit telecom fraud and money laundering. He is accused of operating forced labor “pig-butchering” scams, defrauding victims worldwide of billions of dollars.
Alongside criminal charges, the DOJ filed civil forfeiture suits targeting approximately 127,271 BTC (about $15 billion). These bitcoins are now under U.S. government custody, making it the largest confiscation in U.S. history. Chain analysis by TRM Labs shows the bitcoins have been mostly dormant since December 2020, with activity resuming around June-July 2024, coinciding with DOJ seizure.
In terms of sanctions, the U.S. Treasury OFAC and the UK Foreign, Commonwealth & Development Office (FCDO) coordinated sanctions against 146 related targets linked to the Prince Group; FinCEN, under the Patriot Act §311, officially cut Huione Group off from the U.S. financial system. FinCEN identified Huione as a key money laundering hub for North Korea’s hacking groups and Southeast Asian transnational crime organizations, laundering over $4 billion from August 2021 to January 2025.
The laundering funds include: $37 million stolen by North Korea’s cyber theft, $36 million from crypto investment scams, and $300 million from other online frauds. According to FBI’s 2024 Internet Crime Complaint Center report, U.S. crypto investment scams alone caused losses of $5.8 billion in 2024. In a confirmed case, a Brooklyn-based money laundering network transferred about $18 million from over 250 U.S. victims to the Prince Group accounts between May 2021 and August 2022. After exposure, South Korea and Singapore followed with sanctions, with South Korea calling it “the largest single sanctions action in history.” The dispute remains unresolved. No timeline exists for victim compensation.
Funds flow: Civil forfeiture pending; actual victim compensation: still zero as of February 2026.
North Korea Lazarus Hacker Group, Only the Tip of the Iceberg
Since 2014, North Korea’s Lazarus Group (also known as APT38) has stolen over $5 billion in cryptocurrency, making it the most active crypto crime group worldwide. Major cases include: $620 million stolen from Ronin Network (Axie Infinity) in 2022; $100 million from Harmony Horizon cross-chain bridge in 2022; and $1.5 billion from Bybit in February 2025, the largest single exchange hack in history.
U.S. authorities have filed multiple civil forfeiture actions, seizing about $50 million since 2020—less than 1% of the total stolen. In June 2025, DOJ recovered $7.74 million in crypto from North Korean IT contractors posing as U.S. freelancers.
Most stolen assets are laundered through mixers and vanish on-chain. The small amount recovered flows into government accounts, with no public victim compensation plan. The $15 billion loss at Bybit was mainly covered by the exchange’s own funds, not law enforcement recovery.
Funds flow: U.S. government confiscation accounts. Actual victim compensation: minimal to none.
LockBit Ransomware Case, $500 Million Ransom, No Refunds
In February 2024, Operation Cronos, led by the UK’s National Crime Agency (NCA) and involving law enforcement from over ten countries including the U.S., Europe, and Australia, dismantled LockBit’s infrastructure, seizing 34 servers and freezing over 200 crypto accounts. In May 2024, DOJ charged Russian citizen Dmitry Khoroshev with 26 counts, alleging he collected about $100 million in Bitcoin as LockBit’s main developer. Since 2020, LockBit has extorted over 2,500 victims in more than 120 countries, with known ransoms exceeding $500 million, including over 1,800 victims in the U.S.
Law enforcement successfully distributed about 7,000 decryption keys, preventing further losses for some victims who had not paid ransom. However, funds paid by victims (hospitals, schools, governments) have not been recovered, nor is there a dedicated compensation fund. Khoroshev remains at large in Russia, and OFAC has sanctioned him.
Funds flow: Frozen accounts belong to the government; no victim payouts. Decryption keys provided, but no cash compensation.
BTC-e / Alexander Vinnik Case, Confiscation Difficulties
Russian citizen Alexander Vinnik was arrested in Greece in July 2017. His BTC-e exchange handled over $9 billion in Bitcoin transactions, making it one of the largest money laundering platforms at the time. FinCEN fined BTC-e $110 million. Vinnik served five years in France, was extradited to the U.S., and pleaded guilty in May 2024. Before sentencing—by February 2025—he was released in a prisoner swap, returning to Russia in exchange for an American journalist. The criminal case was thus terminated.
On June 30, 2025, DOJ filed a civil forfeiture action against remaining BTC-e assets, with a 60-day claim window (ending September 2, 2025). Victims can file claims, but the process is lengthy and requires detailed transaction and KYC records. Given the complexity and number of claimants, final distribution remains highly uncertain.
Funds flow: Pending. Actual victim compensation: in process.
Twitter Hack Victims Never Received Compensation
On July 15, 2020, 17-year-old Florida teen Graham Ivan Clark used social engineering to hack Twitter’s internal tools, hijacking about 130 verified accounts including Obama, Biden, Elon Musk, and Gates, posting “double your Bitcoin” scam tweets. Within hours, he stole about $117,000 in Bitcoin. Clark was sentenced in March 2021 to three years in prison. Authorities recovered over $3 million in Bitcoin from Clark’s accounts (including proceeds from SIM swapping scams).
The victims—ordinary users who sent Bitcoin—never received any compensation. The seized cryptocurrencies went into government accounts, with no dedicated victim fund or appeal process.
Funds flow: U.S. government confiscation accounts. Actual victim compensation: zero.
Why Do Victims Keep Getting Fooled?
These cases are not accidents but the inevitable result of two systems operating in tandem.
In the U.S., law explicitly states victims can only recover the “fair market value on the date of loss,” not the actual value at confiscation. For example, if a victim lost 1 BTC when Bitcoin was $8,000 in 2019, even if the government now holds that coin worth $100,000, the victim can only claim $8,000—the rest, $92,000, legally remains with the government.
In the UK, ARIS splits confiscated assets into three parts: half to law enforcement officers and prosecutors, half to the Home Office, and a much smaller share to victim compensation channels. In fiscal years 2024–2025, UK law enforcement received about £160.3 million through ARIS, while victims received only about £47.2 million—roughly a 3.4:1 ratio.
The U.S. 2025 establishment of the Strategic Bitcoin Reserve further entrenches this pattern. The executive order directs the Treasury to retain rather than auction confiscated Bitcoin, making the federal government one of the largest Bitcoin holders globally. This reserve conflicts fundamentally with victim compensation interests.
Meanwhile, procedural barriers also hinder victims: claims must be filed within 30 days of notification, with detailed wallet addresses, transaction IDs, and KYC info. In cross-border cases, victims in multiple countries are often unaware of U.S. administrative procedures, missing the window and losing their right to claim.
In the Qian Zhiming case, 128,000 elderly Chinese victims watched their savings turn into a legal dispute between London police and the UK Treasury; in Silk Road, billions of dollars in Bitcoin are locked into the U.S. strategic reserve due to the “lack of legitimate victims”; in Huione, thousands of victims worldwide have been confirmed but see no timeline for compensation amid the $15 billion confiscation.
If criminals are brought to justice, justice is served. But who pays for these “second-level illegal seizures”?
