Law enforcement agencies across several U.S. states are increasingly seizing cryptocurrencies linked to criminal activities, even in the absence of specific legislation. Connecticut and Texas have enacted laws explicitly allowing such forfeitures, while other states rely on broader existing statutes. Challenges persist in compensating victims amid volatile asset values.
The rise of cryptocurrencies has posed new hurdles for law enforcement, particularly in seizing digital assets tied to crimes like fraud and money laundering. Although most states lack targeted laws, officials have successfully forfeited cryptocurrencies under general forfeiture provisions.
Connecticut Governor signed House Bill 6990 on June 23, 2025, set to take effect July 1, 2026, designating virtual currency and digital wallets as forfeitable property connected to criminal activity. Before this, on August 9, 2024, Connecticut State Police seized over $63,500 in cryptocurrency from a fraudster accused of phishing to steal $68,000 from a resident.
Texas followed with Senate Bill 1498, effective September 1, 2025, which broadens "contraband" to include digital currencies, non-fungible tokens, and stablecoins, providing guidelines for seizure and storage. In 2024, Houston Police Department traced and seized $200,000 in Tether and Ethereum after a victim was defrauded of over $800,000 via a fake platform, returning the assets to the victim.
States without specific laws, such as Virginia, Ohio, and New Jersey, have also acted. Virginia's broad property definitions under Code § 19.2-386.19 enabled the Loudoun County Sheriff’s Office to seize $1.4 million in stolen cryptocurrency from a "pig butchering" scam on February 24, 2025. Ohio's Section 2981.02 allowed recovery of $35,600 in Bitcoin in April 2025 for a scam victim. In New Jersey, Section 2C:64-1 facilitated seizure of fraud-obtained cryptocurrency in an extortion case where a victim was tricked into paying Bitcoin to avoid arrest.
A key concern is asset value fluctuations during government custody. Federal regulation 28 C.F.R. § 9.8(c) limits victim restitution to the asset's value at the time of loss, excluding post-seizure gains. For instance, a $40,000 Bitcoin theft that later triples in value yields only $40,000 to the victim. With $5.6 billion in cryptocurrency fraud losses reported in 2023 by the FBI's Internet Crime Complaint Center, experts argue this approach shortchanges victims, urging states to address valuation for fair compensation.
