In the U.S., the Department of Justice launched the Digital Asset Coordinator Network, which is a nationwide network of federal prosecutors who are dedicated to investigating digital asset-related crimes. In the U.K., the Financial Conduct Authority is leading the charge in regulating cryptoasset firms, and the Queen's Speech in May 2022 outlined a new Economic Crime Bill that would give authorities more tools to seize cryptoassets.

In February 2022, the U.S. Department of Justice announced the seizure of $3.6 billion worth of bitcoin in connection with the 2016 hack of Bitfinex, which is the largest financial seizure ever. In July 2021, London's Metropolitan Police seized £180 million of cryptocurrency in connection with suspected money laundering. The U.K.'s National Crime Agency also reported that it confiscated around £26.9 million in cryptocurrency assets between April 1, 2021, and March 31, 2022.

In the U.S., cryptoassets have been the focus of much attention by enforcement authorities in recent years. At the federal level, this is mainly the purview of the Securities and Exchange Commission, the Department of Justice, the Commodity Futures Trading Commission and the Financial Crimes Enforcement Network of the U.S. Department of Treasury. In the U.K., regulation of cryptoassets has likewise become a focus for regulators and law enforcement agencies. Under the Financial Conduct Authority's scrutiny, crypto-related firms now face a new requirement to register in the U.K., and cryptoasset firms must comply with anti-money laundering regulations and are subject to the Financial Conduct Authority's enforcement powers.

U.S. authorities have increasingly used asset forfeiture as a tool in crypto-related enforcement proceedings, seizing several billions of dollars of cryptoassets in recent years. For instance, since 2015, the U.S. Internal Revenue Service Criminal Investigation has seized over $3.5 billion in cryptocurrency, and, as of December 2021, the U.S. Marshals Service held $919 million in cryptocurrency. In April 2022, federal prosecutors working with local Florida law enforcement obtained forfeiture of $34 million worth of cryptocurrency tied to illegal dark web marketplace activities.

U.S. prosecutors are expected to pursue increasingly aggressive civil forfeiture actions targeting cryptoassets. In these cases, the government can transfer the funds in question instantaneously, whereas transfers involving fiat currency or personal property can take much longer, making crypto-related forfeiture an appealing mechanism for authorities. In order to forfeit cryptoassets, U.S. authorities generally first trace the cryptoassets and transactions using publicly available blockchain information and analytics tools to identify relevant information, such as the dates and amounts of transactions and the origination and destination public address(es).

If needed, agents can then issue subpoenas to financial institutions, virtual-currency exchanges or other third-party intermediaries to obtain relevant records. Armed with this data, authorities can establish the asset's nexus to criminal activity and its location — information that is required to obtain a search warrant authorizing seizure of the asset. Subsequently, authorities may seize the cryptoasset using such a warrant, or through another method that otherwise fulfils the government's obligations under the Fourth Amendment (searches and seizures), such as with the owner's consent.

Forfeiture proceedings are then required so that the title to the seized assets can be permanently transferred to the government. Cryptoassets can be forfeited via administrative, civil judicial or criminal judicial forfeiture. U.S. authorities are increasingly working with cryptoasset and blockchain analytics firms to use advanced technologies to uncover illicit activity and identify linked actors, in addition to crime proceeds and other forfeitable assets. Since 2017, federal agencies including the Drug Enforcement Agency, the Department of Homeland Security, the Internal Revenue Service, the Federal Bureau of Investigation and the Commodity Futures Trading Commission have spent millions of dollars on third-party cryptoasset tracing and blockchain analytic tools.

These technologies have already been put to use at a large scale. For example, in November 2020, using blockchain forensics, the Department of Justice and the Internal Revenue Service identified and retrieved, through a civil forfeiture action, $1 billion worth of illicit bitcoin stolen from Silk Road more than seven years earlier. More recently, in February 2022, the U.S. District Court for the District of Columbia held that the government's use of reliable blockchain analysis software that traced the flow of stolen digital currency to the investigation's targets supported probable cause for a search warrant.

The court further highlighted that such software was becoming commonplace for law enforcement to track financial crimes, noting that this sort of analysis had demonstrated an "unprecedented rate of success" when compared to human informants, bolstered by the software's "lack of incentive or capacity to lie."