In April 2025, FBI Dallas seized approximately 20 Bitcoins from a cryptocurrency address allegedly associated with a member of the Chaos ransomware group. In July, the United States Department of Justice released an announcement stating that it had filed a civil complaint seeking the forfeiture of the amount seized, which is now valued at over $2,400,000.
These days, law enforcement agencies are increasingly targeting cryptocurrency during civil asset forfeiture investigations. They have developed new tools and procedures to track crypto transactions and attempt to prove that the digital assets are tied to unlawful activity. In this guide, we’ll explain how these cases transpire, how you should respond if your Bitcoin has been taken (or if you’ve received a notice that the government intends to forfeit it), and how an experienced criminal defense lawyer like Amanda Skillern can help.
What Is Bitcoin and Why Is It Subject to Civil Asset Forfeiture?
Bitcoin is a form of digital currency that operates without a central bank. You can buy it, sell it, or transfer it online using a digital wallet, which may be stored on a device, in the cloud, or with a third-party cryptocurrency exchange. Every Bitcoin transaction is recorded on a public ledger called the blockchain, which makes it possible to trace movements between wallets.
Because Bitcoin holds real value and can be exchanged for U.S. dollars, law enforcement treats it like any other asset that could be linked to unlawful activity like ransomware or money laundering. If the government says it has probable cause to believe your Bitcoin was obtained through crime (or used to fund one), it may try to seize it through civil forfeiture laws. Unlike criminal forfeiture, this doesn’t require a conviction or even an arrest. Once authorities believe your Bitcoin is tied to an illegal act, they can take steps to seize the wallet or freeze the funds.
How Bitcoin and Wallets Are Identified and Seized
Law enforcement agencies use advanced tools to trace and analyze Bitcoin transactions. Blockchain analysis software such as Chainalysis, Elliptic, and CipherTrace allows officers to map the flow of funds between wallets, cryptocurrency exchanges, and known entities. If your Bitcoin was ever linked to a flagged wallet or passed through a service under investigation, those records may be used against you.
Investigators also issue subpoenas to exchanges that follow Know Your Customer (KYC) rules. These subpoenas can uncover account holders’ names, addresses, banking information, and IP logs. If your account was involved in suspicious activity or even received funds from someone under investigation, you could become the target of a civil forfeiture action.
When tracking funds stored outside of exchanges, investigators rely on digital forensics. They may search your emails, online accounts, or devices for wallet addresses, seed phrases, or encryption tools. If you’ve stored backups in the cloud or used software that logs activity, those records could be used to trace and potentially recover your digital assets. In some cases, law enforcement may work with federal partners like the United States Department of Justice, the Secret Service, or task forces that have additional resources or legal authority.
Bitcoin doesn’t exist in a vault or account: it’s controlled by whoever holds the private key. If you’ve secured your wallet with a strong password or kept your seed phrase offline, law enforcement may struggle to access the funds. However, that won’t stop them from filing a forfeiture petition or trying to block your access through court orders. Even if they can’t immediately transfer the Bitcoin, they may treat the digital asset as seized and seek a ruling to take legal ownership.
Proving Bitcoin’s Connection to Alleged Illegal Activity
To seize your Bitcoin under civil forfeiture laws, the government must show that it’s probably linked to criminal conduct. In Texas, the burden is on the law enforcement agency to prove this by a preponderance of the evidence. That means they must convince a judge or jury that your Bitcoin was used to commit a crime, intended for that use, or represents proceeds from one.
Authorities may try to connect your Bitcoin to illegal activity in several ways:
- If you received funds from a wallet linked to a darknet marketplace or unlicensed exchange, they may argue that your digital assets are tied to money laundering or drug sales.
- If your transaction history includes patterns that resemble structuring or mixing, that could also raise suspicion.
Even if the activity itself isn’t illegal, the appearance of concealment may be used as evidence.
As we stated earlier, you don’t need to be charged or convicted for the government to make its case. In fact, civil forfeiture often moves forward in the absence of criminal charges. That’s why it’s important to respond quickly if your Bitcoin has been seized or if you’ve received a notice that forfeiture proceedings are underway.
Physical Property vs. Digital Asset Seizures
When officers seize physical property, such as cash or a vehicle, they take direct possession and hold it as evidence. You might receive a receipt, and the asset usually ends up in a storage facility, impound lot, or evidence room. That kind of asset seizure is easy to understand: you can see it, touch it, and track where it’s held.
Bitcoin doesn’t work the same way. Seizing digital assets requires access to the private key or the account where the asset is stored. Without that information, they can’t move the funds, even if a court gives them permission to take it.
Once physical property is seized, it can’t be used, spent, or transferred until the case is resolved. With Bitcoin, the situation can change in seconds. If you move the funds before officers secure them, the wallet may be empty by the time a seizure order is issued. That’s why investigators try to act quickly once they believe the digital asset is traceable.
Defending Against Bitcoin Seizure and Forfeiture
If the government moves to forfeit your Bitcoin or any other digital currency, you have the right to challenge that action in court. In Texas, that involves responding to a lawsuit filed under Chapter 59 of the Code of Criminal Procedure. You’ll need to respond quickly so the court doesn’t rule against you by default. Once you respond, you can begin building a defense that shows your asset wasn’t linked to criminal activity.
One approach is to argue that there’s no probable cause to believe the Bitcoin was used in, or gained from, a crime. If your wallet was funded through mining, legitimate business, or personal transactions, you can present records that support your claim. Bank transfers, exchange logs, invoices, or tax filings may help establish that your asset was earned lawfully.
Another defense is the innocent owner claim. If you can show that you had no knowledge of any unlawful use of the asset, or that you acquired it before any alleged criminal conduct, you may be able to stop the forfeiture. The court will consider your involvement, your knowledge of the asset’s source, and your efforts to keep it separate from illegal activity.
What To Do If Your Bitcoin Is Seized
If law enforcement has seized your digital currency or you’ve been notified of a forfeiture case, contact a Texas criminal defense attorney who handles civil asset forfeiture cases and let them deal with law enforcement on your behalf.
Ask your attorney to obtain any asset seizure warrant, notice of seizure, or civil forfeiture complaint filed against your property. These documents explain why the government believes your Bitcoin can be forfeited. A lawyer can help you respond within the required deadline and prevent a default judgment that gives the government control of your seized assets without a hearing.
You should also begin gathering records that show how you acquired your Bitcoin. If you mined it, received it through business transactions, or purchased it with verifiable funds, your asset forfeiture attorney can use that information to build your defense. They can also help you challenge weak or unsupported claims and raise any innocent owner defenses that apply. The sooner you involve a lawyer, the stronger your position will be in court.
Concerned About Bitcoin Seizure? Speak to a Texas Civil Asset Forfeiture Lawyer
Bitcoin and other digital assets are no longer off the radar in civil forfeiture cases. If officers believe your wallet holds property tied to criminal activity, they may move quickly to freeze or seize it, even if you haven’t been arrested.
You don’t have to accept the forfeiture or hand over your Bitcoin without a fight. A lawyer who understands digital currency, blockchain technology, and civil forfeiture law can help you respond, assert your rights, and challenge the government’s claims.
If your digital currency has been seized or you’re worried it might be, contact the Law Office of Amanda Skillern. We’ll help you understand your options and defend what’s yours. Call 346.291.0432 or contact us online to request a confidential consultation today.
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