Seizing Coins without Cashing Out

If the coins are seized without cashing out and being sent to another address, the process will remain the same but with a few noteworthy exceptions:

Seizure and storage would require a little more preparation. You should select the wallet software you managed to use for the seized coins. I would highly recommend a multisignature address, so when the funds are transferred, the funds cannot be moved without the keys of the other keyholders or the address.

This will serve to protect the investigator if any of the coins comes up missing. By creating a wallet with multisignature addresses, you are afforded the luxury of wallet importation for suspects privacy with a private key, transferring all of the funds to a multisignature wallet, and then backing all of this up with cold storage(ex. paper) and storing the private key back up securely.

To set up a storage wallet, you can certainly choose the Electrum Wallet software for Bitcoin. This is a thin client and does not need the intricacies of a full Bitcoin blockchain to be set up fairly quickly.

First off, create the storage wallet that will receive the suspect’s keys and download the Electrum Download, which can be downloaded at https://electrum.org/#download. Use the case number to name the wallet and ensure proper identification. The next screen will ask what type of wallet should be created…

You can select the multisignature wallet option and choose the number of co-signers you require. The next screen will pop up, and you can create a New Seed option, which will, in turn, generate the 12-word recovery mnemonic code. Electrum will force you to re-key the code and will not allow you to copy and paste. It must be manually typed in.

All of these steps should allow you to generate a Master Public Key that you can give to your co-signers if needed. You can now enter the public keys of the address, and it will generate addresses that begin with 3 to indicate that they are multisig addresses. By now, you should receive have an address ready to receive seized coins.