Valuation Fluctuations

The best example of bitcoin fluctuation is best described in the following manner, with an investigation taking possibly several years to bring the case to a close. In just a little over a year, Bitcoin has increased from $1000 to $20,000. You can only imagine the situation wherein coins are seized at a value of $20,000, and by the time the case makes its way through the courts, the Bitcoin has slumped to $500.00. Who should incur the lost amount of money? Is there a liability here for lost value? And if so, who is the responsible party?

Some investigators in the past have asked judges to decide as to whether or not to convert coins to fiat currency. It has even been suggested the suspect be given the option of cashing the coins out or having the investigator hold onto them or transfer them to a cryptocurrency address and held until the case is decided.

If the suspect chooses to separate himself from the currency and has nothing to do with the currency, the investigator can decide which course of action to take without fear of reprisal. Unfortunately, the suspect’s story may change along the way, and the opportunity to prosecute may become more difficult.

There seem to be many thoughts on this and what is the best course of action to proceed. Cashing out the coins at the point of seizure is certainly an option with the thought the private key may be held by more than one party.

This could be done during a live response or perhaps later in a lab, but great care must be given not to compromise anything else on the suspect’s computer. Therefore, processes and preparation must be in place before this can happen, especially if this is done live on the suspect’s computer.

Either way, cashing out requires a significant amount of preparation. First, you must determine which exchange you will use. The process can be expedited if the investigator has and should set up a relationship with a trusted exchange knowing that the coins they are dealing with are currently involved in an ongoing criminal investigation, perhaps even agreeing to lower fees.

You must also understand the exchange process for cashing out. The investigator should have authentication on hand and possibly the addresses for the funds to be transferred to. Setting up a bank account in advance can be tricky as some banks understand the cryptocurrency process and show some resistance to get involved. The banking manager needs to know in advance, if possible, the dynamics of the exchange and the reason it is taking place at their institution. If the investigator could outline the investigation with few details, the banking partner may be more willing to be more forthcoming.

The banking manager should understand the investigator’s needs if his efforts prove fruitful in the exchange. Once the coins are cashed out, it becomes a normal part of the process as the retention and management of the funds can be carried out in the usual manner.


Was this helpful?

Yes No
You indicated this topic was not helpful to you ...
Could you please leave a comment telling us why? Thank you!
Thanks for your feedback.

Post your comment on this topic.

Post Comment