The ethics of cryptocurrency seizures by states
In the world of cryptocurrencies, states are increasingly faced with an ethical dilemma: what to do with bitcoins and other cryptocurrencies seized from criminal groups? While it is understandable that governments seek to confiscate illicit assets, the question arises as to whether these funds should become part of the national treasury or whether they should be returned to the affected users.
The ethical debate
The seizure of cryptocurrencies raises a number of complex ethical issues:
- Legitimate ownership: to whom do the seized cryptocurrencies really belong? While it is true that they were used by criminals, what if some of these funds were legitimately obtained by users who were victims of theft or fraud? Shouldn’t they be entitled to get their assets back?
- Justice and redress: Is it fair for the state to keep the seized cryptocurrencies instead of using them to compensate the victims of crime? Wouldn’t it be more ethical to use these funds to repair the damage caused and prevent future crimes?
- Transparency and accountability: How are seized cryptocurrencies managed, is there a public record of these seizures, and what control mechanisms are in place to prevent the funds from being misused? Lack of transparency in this process can lead to mistrust and suspicions of corruption.
- Perverse incentives: If states have the power to keep seized cryptocurrencies, does this not create a perverse incentive for law enforcement to focus on seizing cryptocurrencies rather than prosecuting more serious crimes?
Examples of seizures
To illustrate the magnitude of this problem, it is important to mention some examples of cryptocurrency seizures by different countries:
• The United States has seized a significant amount of bitcoins and other cryptocurrencies. In one case, the FBI seized more than 69,000 bitcoins linked to the Silk Road online black market.
• China has also made significant seizures of cryptocurrencies. In one operation, authorities seized 194,197 bitcoins, 823,183 ethers and other cryptocurrencies worth billions of dollars.
• Germany has seized bitcoins in connection with criminal activities such as drug trafficking and money laundering. In one case, police seized more than 50,000 bitcoins.
These are just a few examples. The amount of cryptocurrencies seized by states varies considerably and depends on factors such as the prevalence of crime in each country, the effectiveness of law enforcement and existing legislation.
The case for return to users
From an ethical point of view, there are strong arguments in favour of returning seized cryptocurrencies to affected users:
• Restitution of harm: The return of funds to victims is an act of justice that contributes to repairing the harm caused by the crimes.
• Protection of property rights: Cryptocurrencies, like any other asset, are the property of their rightful owners. The state should not appropriate these funds without clear and transparent justification.
• Building trust: The return of cryptocurrencies to affected users builds trust in the judicial system and in the state’s ability to protect citizens’ rights.
The argument in favour of state retention
On the other hand, there are also arguments in favour of the state retaining seized cryptocurrencies:
• Financing state activities: funds obtained from seizures can be used to finance state activities such as fighting organised crime, improving public security or investing in infrastructure.
• Compensation for investigation costs: Police and judicial investigations related to cryptocurrency crimes can be costly. The state could use seized funds to compensate for these expenses.
Deciding what to do with seized cryptocurrencies is a complex ethical challenge that requires a public and transparent debate. It is essential to strike a balance between the need to fight crime and the protection of citizens’ rights. In my view, the return of funds to the affected users should be the general rule, except in exceptional cases where there are compelling reasons for the state to retain seized cryptocurrencies.
What are your thoughts on this issue, do you think seized cryptocurrencies should be returned to the affected users or should they become part of the national treasury? Share your opinions in the comments!
Disclaimer: The information set forth herein should not be taken as financial advice or investment recommendation. All investments and trading involve risk and it is the responsibility of each individual to do his or her due diligence before making a decision.
