Original | Odaily Planet Daily (@OdailyChina)

Author｜jk

Since 2018, American and British law enforcement agencies have seized over $40 billion in cryptocurrency assets in more than ten major cases. However, in the vast majority of cases, the victims have received nothing. The digital assets that were supposed to be returned to the victims have quietly flowed into government treasuries, strategic reserve funds, and operational budgets of law enforcement agencies.

This article reviews several typical cases, revealing this invisible secondary plundering.

Is anyone curious where the money went after seizure?

In traditional criminal justice, the purpose of seizing criminal proceeds is to deprive criminals of illicit gains and, where possible, to compensate victims. However, when the target of law enforcement shifts to cryptocurrencies, this logic no longer holds.

Current U.S. regulations (the Federal Regulations) explicitly cap compensation for victims at the "fair market value on the day the loss occurred." This means that if a victim lost 10 BTC when the price of Bitcoin was $5,000, even if the government holds these coins worth a million dollars, the victim can only claim $50,000. The huge premium from the price increase legally belongs to the government.

The laws in the UK are similarly "tyrannical." According to the Asset Recovery Incentivizing Scheme (ARIS), 50% of seized assets go to the police and prosecution agencies involved in law enforcement, while the other 50% is paid to the Home Office. The independent victim compensation channel receives far less funding than the first two, and the application process is complicated and has a high threshold.

In March 2025, President Trump signed an executive order establishing a "strategic Bitcoin reserve,” requiring the Treasury Department to retain rather than sell the seized Bitcoins. This further reinforced the government's retention motive and institutionally blocked potential paths for victim compensation.

Typical Cases: Where Did the Victims' Money Go?

UK: Qian Zhimin Case, the largest single cryptocurrency seizure in the world

This is the largest single cryptocurrency seizure in the world to date. In October 2018, the Economic Crime Command of the Metropolitan Police launched raids on several properties and seized about 61,000 Bitcoins. At the time of the seizure, they were worth about £305 million, but by the end of the trial, they had risen to about £5.5 billion (approximately $7.2 billion).

The defendant, Jian Wen (42, dual nationality), acted as a money laundering intermediary for this batch of Bitcoins, and was convicted in March 2024 and sentenced to 6 years and 8 months in prison; the mastermind, Qian Zhimin (47, a Chinese citizen), is the founder of the Chinese company "Blue Sky Group," which defrauded more than 128,000 elderly investors in China from 2014 to 2017 with promises of high returns, involving over $5.6 billion. She was captured in April 2024, pleaded guilty in September 2025, and in November of the same year was sentenced to 11 years and 8 months in prison.

The annual meeting once held by Blue Sky Group

What about the victims? All 128,000 victims are Chinese citizens, many of whom are retired elderly individuals who have spent their life savings to purchase the company's assets, all holding onto dreams of getting rich—even during the liquidation and compensation phase. However, at this stage, both the UK government and the Chinese government claim sovereignty over this batch of Bitcoins, and the civil recovery process is ongoing, but legal experts admit that given the dual national sovereignty dispute, the likelihood of victims being compensated is very low. On the Chinese side, efforts to collect information on the victims have begun, but how many of them will ultimately be compensated, whether the compensation will reflect the value at the time of loss or include the appreciation of Bitcoin, and whether this funding will entirely remain with the UK enforcement agencies, remains unknown.

Funds flow: UK Treasury (estimated). Actual compensation to victims: zero, but the case has not yet concluded.

USA: Silk Road Case, $3 billion of "unclaimed property"

Silk Road was the most notorious dark web drug trafficking platform in history, with founder Ross Ulbricht arrested in 2013, after which its accumulated Bitcoins were gradually confiscated.

In November 2021, the IRS-CI seized 51,680 Bitcoins from a single-board computer hidden in a home in Georgia, valued at over $3.36 billion. Zhong (32 years old, from Georgia) stole this batch of coins in 2012 using a system vulnerability and then hid for nearly a decade, being sentenced to one year and one day in prison in April 2023.

Because Silk Road itself was an illegal platform, the court determined there were "no legitimate victims," and both batches of confiscated assets went directly to the government. In December 2024, a federal judge rejected a compensation request from an investment company, clearing the path for the government to handle the assets. According to the 2025 strategic Bitcoin reserve executive order, this batch of assets may permanently remain within the Federal Reserve.

Funds flow: US Treasury strategic Bitcoin reserve. Actual compensation to victims: zero.

Prince Group / Huione / Chen Zhi Case, a $15 billion unresolved case

On October 14, 2025, the U.S. Department of Justice publicly filed charges in a New York federal court against Chen Zhi (also known as Vincent, 37 years old, Cambodian nationality), founder and chairman of the Prince Holding Group in Cambodia, on two counts of conspiracy to commit telecommunications fraud and money laundering, accusing him of orchestrating operations of forced labor "pig-butchering" scam bases, defrauding billions of dollars from victims worldwide.

Alongside the criminal charges, the DOJ filed a civil forfeiture lawsuit targeting approximately 127,271 Bitcoins (around $15 billion), which are now under the custody of the U.S. government and represent the largest asset seizure in U.S. history. According to chain analysis from TRM Labs, the aforementioned Bitcoins have been dormant since December 2020, until signs of activity appeared between June and July 2024, coinciding with the DOJ's seizure actions.

In terms of accompanying sanctions, the U.S. Treasury's OFAC collaborated with the UK Foreign, Commonwealth & Development Office (FCDO) to sanction 146 associated targets of the Prince Group's transnational criminal organization; FinCEN completed a final ruling according to Section 311 of the Patriot Act to officially cut off Huione Group from the U.S. financial system. FinCEN identified Huione Group as a key money laundering hub for North Korean cyberattack hacker organizations and Southeast Asian transnational criminal organizations, laundering over $4 billion in illegal proceeds from August 2021 to January 2025.

The detailed account of laundered funds under Huione Group includes: $37 million from North Korean cyber theft, $36 million from cryptocurrency investment scams, and $300 million from other cyber frauds. According to the FBI's Internet Crime Complaint Center report in 2024, losses from cryptocurrency investment scams in the U.S. alone reached $5.8 billion that year. In confirmed cases, the Brooklyn money laundering network transferred about $18 million in illegal proceeds from over 250 American victims to the Prince Group accounts between May 2021 and August 2022. After the incident was exposed, South Korea and Singapore promptly followed suit to impose sanctions on the Prince Group, with the South Korean Ministry of Foreign Affairs calling it "the largest single sanction operation in history." The controversy remains unresolved. There is still no timeline for the victim compensation plan.

Funds flow: Civil forfeiture process pending; actual compensation to victims: as of February 2026, still zero.

North Korea's Lazarus Hacker Group, recoupment is just the tip of the iceberg

North Korea’s state-sponsored hacker group Lazarus (also known as APT38) has stolen over $5 billion in cryptocurrency since 2014, making it the most active cryptocurrency crime group globally. Major cases include: $620 million stolen in 2022 from Ronin Network (Axie Infinity); $100 million stolen in 2022 from Harmony Horizon cross-chain bridge; and $1.5 billion stolen in February 2025 from Bybit, marking the largest single theft of a cryptocurrency exchange in history.

U.S. authorities have initiated civil forfeiture lawsuits for multiple batches of assets, seizing approximately $50 million cumulatively since 2020, accounting for less than 1% of the total stolen amount. In June 2025, the DOJ recouped $7.74 million in crypto assets related to North Korean IT outsourcing workers impersonating American freelancers.

The vast majority of stolen assets disappear on-chain after being laundered through mixers. The very small amount of assets recouped flows into government seizure accounts, with no public compensation distribution plan. In the $15 billion loss from Bybit, the shortfall suffered by affected users was primarily covered by the exchange's own funds rather than from law enforcement recoupments.

Funds flow: U.S. government seizure account. Actual compensation to victims: minimal to none.

LockBit Ransomware Case, $500 million ransom not returned

In February 2024, "Operation Cronos," led by the UK National Crime Agency (NCA), in collaboration with law enforcement agencies from over ten countries including the U.S., Europe, and Australia, successfully dismantled the global infrastructure of LockBit, seizing 34 servers and freezing more than 200 cryptocurrency accounts. In May 2024, the DOJ charged Russian citizen Dmitry Khoroshev with 26 counts, accusing him of being the main developer for LockBit and collecting approximately $100 million in Bitcoin commissions. Since 2020, LockBit has extorted 2,500 victims across over 120 countries, with known ransom totals exceeding $500 million, over 1,800 of whom are victims in the U.S.

The law enforcement operation successfully distributed around 7,000 decryption keys, preventing further losses for some victims who had not paid ransom. However, funds paid as ransom by institutions (hospitals, schools, government departments, etc.) have not been recovered, and there is no dedicated compensation fund. Khoroshev remains at large in Russia, and OFAC has sanctioned him.

Funds flow: Frozen accounts belong to the government, with no distribution. Actual compensation to victims: decryption keys (but no cash compensation).

BTC-e / Alexander Vinnik Case, recoupment procedure difficulties

Russian citizen Alexander Vinnik was arrested in Greece in July 2017; his BTC-e exchange processed over $9 billion in Bitcoin transactions and was one of the largest Bitcoin money laundering platforms at the time. FinCEN imposed a $110 million fine on BTC-e. After serving five years in France, Vinnik was extradited to the U.S., pleaded guilty in May 2024, but was released—before formal sentencing in February 2025—due to being used as a prisoner exchange chip for an American journalist captured in Russia, thereby terminating the criminal proceedings.

On June 30, 2025, the DOJ filed a civil forfeiture lawsuit for the remaining BTC-e virtual currency, opening a 60-day claim window (until September 2, 2025). Users and other victims can file claims, but the review process is lengthy and requires the submission of detailed transaction records and KYC information. Given the complexity of the involved assets and the large number of claimants, the final distribution outcome is highly uncertain.

Funds flow: Pending. Actual compensation to victims: Claims process ongoing.

Twitter Hack Case, small-scale scam victims have never been compensated

On July 15, 2020, 17-year-old Florida teen Graham Ivan Clark used social engineering techniques to hack into Twitter's internal tools, taking over about 130 verified accounts of figures such as Obama, Biden, Elon Musk, and Bill Gates, posting scam tweets about "doubling Bitcoin" and scamming approximately $117,000 worth of Bitcoin within hours. Clark was sentenced to 3 years in prison in March 2021. Law enforcement agencies recouped over $3 million worth of Bitcoin from Clark's account (including prior fraud proceeds from SIM card swapping).

Victims of this Twitter scam (ordinary users scammed into sending Bitcoin) have received no compensation. The recovered cryptocurrency was seized by the government following standard procedures, with no special compensation fund or appeals channel for Twitter scam victims.

Funds flow: U.S. government seizure account. Actual compensation to victims: zero.

Why are victims always repeatedly bullied?

The above cases are not coincidental but rather the inevitable result of two operating systems.

In the U.S., the law explicitly states that victims can only pursue "fair market value on the day the loss occurred," rather than the actual value at the time of seizure. This means that if a victim lost 1 BTC when the price of Bitcoin was $8,000 in 2019, even if the government holds that coin today worth $100,000, the victim can only claim $8,000, with the remaining $92,000 price difference legally retained by the government.

In the UK, the Asset Recovery Incentivizing Scheme (ARIS) splits seized assets into three parts: half goes to the police and prosecution agencies involved in law enforcement, and half is paid to the Home Office, while the separately established victim compensation channel receives far less funding than the share going to the enforcement agencies. In the 2024 to 2025 fiscal year, British law enforcement agencies obtained about £160.3 million through ARIS, while compensation for victims was only about £47.2 million, at a ratio of approximately 3.4:1.

The strategic Bitcoin reserve established in the U.S. in 2025 further solidifies this pattern. The executive order explicitly directs the Treasury to retain the confiscated Bitcoins instead of auctioning them, making the federal government one of the largest holders of Bitcoin globally. This reserve logic fundamentally conflicts with victim compensation.

At the same time, victims face procedural barriers: claims for compensation must be submitted within 30 days of notification, along with detailed complaint materials, including wallet addresses, transaction IDs, and KYC records. In multinational cases, victims dispersed across multiple countries are often oblivious to U.S. administrative procedures, missing the window of opportunity and permanently losing the right to appeal.

In the Qian Zhimin case, 128,000 Chinese elderly victims watched their invested life savings turn into legal disputes between the Metropolitan Police and the UK Treasury; in the Silk Road confiscation case, billions of dollars in Bitcoin were directly locked into the U.S. strategic reserve due to the legal determination of "no legitimate victims"; in the Huione case, tens of thousands of "pig-butchering" victims, although confirmed, see no compensation timeline in the $15 billion confiscation action.

If criminals being brought to justice is about upholding justice, who is paying for these "legitimate secondary plunderings"?

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