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Seizure does not automatically mean the U.S. government permanently owns or immediately sells cryptocurrency. Under Department of Justice policy, agencies generally secure seized crypto in government-controlled wallets and keep it in the form seized until forfeiture is final. What happens next—return, liquidation, or possible victim compensation—depends on the case, governing law, and the asset involved.
Seizure, custody, and forfeiture are different stages
A seizure places cryptocurrency in government custody; it is not, by itself, the final decision that the property is forfeited. The DOJ Asset Forfeiture Policy Manual 2025 describes the handling of crypto while a forfeiture case is pending, while the DOJ’s Justice Manual on the use and disposition of seized and forfeited property addresses the general rule against liquidation before forfeiture becomes final.
Forfeiture becomes final through a final court order or, where applicable, final administrative forfeiture. Until then, the government’s role is generally to safeguard the property while the legal process proceeds—not to treat every seized coin as permanently government-owned.
How cryptocurrency is taken into custody
The seizure method depends on where and how the cryptocurrency is held. The DOJ’s Asset Forfeiture Policy Manual 2025, Chapter 4, sets out the following approach:
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- Self-custodied wallet in the United States: DOJ guidance calls for a seizure warrant covering the cryptocurrency possessed and controlled by the owner, served on the owner or the owner’s counsel.
- Account at a U.S.-based virtual asset service provider: The agency should obtain and serve a warrant on the provider, such as an institutional exchange.
- Foreign-based provider: DOJ directs prosecutors to consult its Office of International Affairs. A case may require mutual legal assistance or similar legal authority.
After a seizure, the agency processes the cryptocurrency through its forfeiture department and assigns it a Consolidated Asset Tracking System (CATS) identification number. Agencies must have a government-controlled self-custodial or cold-storage wallet for temporary storage before any transfer to the U.S. Marshals Service (USMS) or a USMS contractor. DOJ says each cryptocurrency type should be held in its own wallet; an agency may use one or more wallets for a seizure.
A transfer to USMS or a contractor for pre-forfeiture storage is conditional. It can happen when the asset is supported and a receiving wallet is available under current procedures. DOJ advises agencies to consult USMS during seizure planning because the Marshals Service may not be able to store or liquidate every cryptocurrency type.
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Why seized crypto generally is not sold right away
The DOJ’s general policy is to keep cryptocurrency in the form seized and not liquidate it—convert it to cash or another cryptocurrency—until a final forfeiture order is entered or administrative forfeiture becomes final. The manual explains that an early conversion can expose the government to price fluctuations and create potential responsibility for making an owner whole if the asset must later be returned.
There are limited circumstances in which a prosecutor may seek an interlocutory sale or pretrial conversion. The DOJ manual says prosecutors and agents must consult the Money Laundering and Asset Recovery Section (MLARS) before seeking an interlocutory sale order. It identifies a request or consent by all parties with an ownership interest, and certain cases involving victims’ pecuniary losses, as circumstances in which an order may be sought. These are exceptions, not a universal schedule or guarantee of an early sale.
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What can happen after forfeiture becomes final
For covered property held under DOJ authority, USMS has primary authority over management and disposal. Cryptocurrency liquidation must follow the written policies of both the seizing agency and USMS, as described in the DOJ Justice Manual and the DOJ description of Asset Forfeiture Program participants and roles.
Those sources do not establish one sale method or timetable for every cryptocurrency. The route also differs for anonymity-enhanced cryptocurrencies (AECs): DOJ says law enforcement should keep AECs in agency self-custodial or cold-storage wallets until further notice from USMS. Prosecutors should seek MLARS or USMS guidance on disposition, and MLARS approval is required for requests to sell AECs or place them into official use.
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Can the owner get seized cryptocurrency back?
Possibly, depending on the case and its legal outcome. Seizure alone does not resolve whether the property is forfeited. If an asset is returned after being converted early, DOJ warns that the government may be responsible for changes in its value; this risk is one reason its default policy is to preserve the cryptocurrency in the form seized.
There is no universal recovery deadline established by the DOJ sources cited here. Anyone seeking the return of property should check the actual forfeiture notice and court filings and consult a qualified attorney about the applicable procedure and deadline. The relevant steps can depend on the case and the law governing the seizure.
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Can victims receive money from forfeited cryptocurrency?
Federal law can authorize compensation for victims from assets recovered through the DOJ Asset Forfeiture Program. The DOJ’s Asset Forfeiture Program overview and FAQ on compensating victims with forfeited assets describe that possibility. It is not automatic: whether victims may be compensated, and how, depends on the case and the governing law.
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