Up to £6million in crypto has been frozen by the courts since new powers came into effect last year, MailOnline can reveal.
Criminals have been increasingly using digital currencies such as Bitcoin to launder money, dodge taxes and fund terrorism.
Ministers last April launched a crackdown on the ’emerging threat’, with police, law enforcement and the HMRC allowed to freeze suspicious cryptocurrency wallets.
Under the rules designed to deprive criminals of ill-gotten gains, suspicious crypto wallets can be frozen for up to three years.
Frozen stashes can then be seized, if a court is satisfied the funds were gained or being used illicitly.
MailOnline’s analysis of court documents published over the last six months found the biggest freezing order was for £1.5m worth of crypto.
It was kept in a single wallet hosted by US-based exchange website Coinbase, with the actual owner remaining a mystery.
The order, made on March 18 at Newcastle Upon Tyne Magistrates’ Court, was requested by HMRC, meaning it could be related to tax evasion.
Even more could have been frozen between April-September 2024 but data held by Courtsdesk – an online database tracking court proceedings in England and Wales – only goes back half a year for legal reasons.
Crypto legal expert Nick Barnard, partner at Corker Binning, said the figure was not huge ‘in the grand scheme’, compared to the billions in daily crypto transactions worldwide or the amounts seized by authorities from traditional bank accounts.
Mr Barnard said the new regime came from a ‘standing start’ last April, so needs time to ‘get up to speed’.
But lawyer Siobhain Egan told MailOnline the Government were directing more resources into freezing crypto to ‘aggressively’ combat money laundering and terrorism financing.
Ms Egan, who defends people whose assets have been frozen, added: ‘We are fully expecting for a tsunami of crypto freezing orders down the track.’
Investigators apply to freeze the crypto wallets of alleged criminals without their knowledge, so they don’t get the opportunity to move Bitcoin or other digital funds.
Ms Egan, director of Lewis Nedas Law, said: ‘If [police] have a major investigation into organised criminals laundering money through crypto, they will go in and seize the assets before they finalise the investigation.
‘The recipient of that order will have to respond to questions from the authorities which can in certain circumstances help them build a case against them, in an overarching investigation.’
She said the new powers are plugging ‘gaps in the investigative process’.
Ms Egan added: ‘Organised crime groups and terrorists using crypto has always been a big fear of the authorities, and they are correct.
‘The alleged villains are using it and the authorities took a little while to catch up in a very fast-moving area.
‘HMRC very keen on it for tackling tax evasion and are getting their act together pretty well. The National Crime Agency (NCA) has also been very aggressive.’
She added that a lot of people who have crypto seized or frozen in the UK are often foreign nationals.
Crypto was used in an estimated £39.8billion ($51.3bn) worth of illicit transactions worldwide last year.
This is up from £35.7bn ($46.1bn) in 2023, and is the highest on record when excluding the billions stolen by FTX co-founder Sam Bankman-Fried, who was jailed in the US for defrauding customers and investors.
The true figures will be much larger because they exclude crimes not ‘native’ to crypto, such as drug trafficking.
According to the Chainalysis report, criminals have changed the coins they are using from primarily Bitcoin in 2020, to so-called ‘stablecoins’, pegged to a commodity with a stable value, such as gold or a real currency. The most common is USDT, which is fixed to the US dollar.
Mr Barnard said: ”The vast majority of police police and finance investigators, don’t understand crypto so there’s not as much resource dedicated to understanding and investigating.
‘There’s less resource dedicated to crypto than money laundering through cash and traditional banking fraud through normal currencies.’
He said some proceeds of serious crime, such as drugs, weapons ‘will be laundered through crypto, but the vast majority is through longstanding “traditional” methods, of which there are very many’.
He said it is usually only practical to freeze crypto assets held on exchanges or centralised wallet providers such as Coinbase, Kraken or Binance, and in the case of the UK crypto-wallet freezing regime, only where that organisation has some connection to the UK to enable the powers to be used.
This is because the exchange service controls the wallet, similar to a bank. However, it is possible to store your wallet on a personal machine protected by a private key, which it cannot be accessed without.
Jian Wen (pictured) was found with Bitcoin wallets worth more than £2billion (now worth £4.5bn). She was convicted of a crime linked to money laundering last May
Chinese takeaway worker Jian Wen had Bitcoin now worth £4.5bn seized last year, in the biggest crypto bust in history.
The 42-year-old drove a E-Class Mercedes-Benz, indulged in £30,000 Harrods shopping sprees and enrolled her son at prestigious £6,000-a-term Heathside Preparatory School near her £5 million home.
It was only when she embarked on building a global property empire, attempting to buy a £23m Hampstead mansion, a £10million Tuscan villa and apartments in Dubai that alarm bells started to ring about the single mother who barely had £5,000 to her name when she arrived in the UK to work in a Chinese takeaway.
Last May, the Chinese immigrant who helped launder Bitcoin from a £5bn investment fraud was jailed for more than six years.
Judge Sally-Ann Hales, KC, said Wen played a key role in a sophisticated criminal enterprise who was ‘generously rewarded’ for her work laundering the proceeds of a wealth management swindle in China , where 128,000 investors were duped.
The Home Office and Coinbase have been contacted for comment.
