In May 2024, UK law enforcement agencies gained new powers to freeze and seize cryptocurrency linked to suspected criminal activity through Crypto Wallet Freezing Orders (CWFrOs). To date, authorities have frozen over £6 million in assets—including high-value holdings on major platforms like Coinbase. This signals a shift from theory to practice. This article explains the legal framework behind these orders, explores their growing use, and offers practical guidance for affected individuals and service providers.
Understanding Crypto Wallet Freezing Orders
A Crypto Wallet Freezing Order functions similarly to an Account Freezing Order but addresses the unique technical aspects of cryptocurrency assets. It is a court order that freezes some or all of the crypto assets held in a wallet managed by a crypto asset service provider with ties to the UK.
These orders are issued by a magistrates' court. A senior officer from a relevant agency—such as the Serious Fraud Office, HM Revenue & Customs, the National Crime Agency, or the police—must persuade the court that there are reasonable grounds to suspect the assets are either:
- Proceeds of crime (whether in the UK or abroad), or
- Intended for use in criminal activity.
Reasonable Grounds for Suspicion
To obtain a CWFrO, the agency must show the court that, on the balance of probabilities, there is reasonable cause to suspect the assets are illicit. This is generally not a high barrier for law enforcement to meet, as the required evidence at this stage is minimal.
If a single entity acts as both a relevant financial institution (for an Account Freezing Order) and a UK-linked crypto asset service provider managing assets for the same person, applications for both orders can be combined.
Duration of a Freezing Order
If granted, a Crypto Wallet Freezing Order can freeze assets for up to two years. This gives investigators time to determine the legality of the funds. If there are pending requests from overseas jurisdictions (such as mutual legal assistance requests), the freeze can be extended to a maximum of three years.
Due to the volatile nature of cryptocurrency, provisions also allow frozen crypto to be converted to cash, which remains frozen.
What Is a Crypto Wallet Forfeiture Order?
If, after investigation, authorities conclude that the frozen crypto assets are indeed illicit, they may apply to forfeit some or all of the assets.
The forfeiture process allows interested parties to object. If no objections are raised within 30 days, the assets are forfeited automatically. If an objection is filed, the agency must apply to the court for a Crypto Wallet Forfeiture Order (CWFO).
Proving Assets Are Proceeds of Crime
At this stage, the agency must convince the court, again on the balance of probabilities, that the assets are criminal proceeds or intended for criminal use. The evidential standard is higher here than for the freezing order. Notably, a forfeiture order can be issued without a criminal investigation or conviction.
Who Might Be Affected by These Orders?
Several parties may be impacted by a CWFrO or CWFO:
- Crypto asset service providers with UK connections.
- Individuals or entities claiming ownership of the frozen assets.
How to Respond to a Freezing or Forfeiture Order
CWFrOs can be issued with or without prior notice, meaning you might not be aware until the order is already in effect.
Because authorities use a phased approach to secure these orders, a strategic response is critical. Effective actions may include:
- Engaging with the relevant agency.
- Attending interviews if requested.
- Submitting written statements with supporting evidence.
- Arguing that grounds for the order are insufficient.
- Highlighting procedural errors by law enforcement.
Given the higher evidential bar for forfeiture, in some cases, it may be strategically wiser to raise objections at this later stage.
Taking appropriate steps early in the process is vital, as it can strengthen your position if the case proceeds to a full forfeiture hearing. We strongly recommend seeking expert legal advice as soon as possible.
Innocent owners and victims also have routes to recover frozen assets under the new laws. In certain situations, you can apply for the release of your crypto. Again, professional legal guidance is essential.
👉 Explore legal guidance for asset recovery
Frequently Asked Questions
What are reasonable grounds for suspicion?
Reasonable grounds mean there is a credible basis for believing the assets are linked to crime. The standard is not particularly high initially, but it must be based on more than mere speculation.
How long can crypto assets be frozen?
Assets can be frozen for up to two years, extendable to three if international legal assistance is involved. Due to volatility, crypto may be converted to and held as stablecoin or cash.
Can I get my crypto back if I’m innocent?
Yes. The regulations include provisions for victims and innocent parties to reclaim assets. You will likely need to provide evidence of legitimate ownership and may need to make a formal application to the court.
Do I need a lawyer to challenge an order?
While not legally mandatory, the process is complex and highly technical. Professional legal assistance dramatically improves your chances of a successful outcome.
Can these orders be issued without a criminal conviction?
Yes. Both freezing and forfeiture orders are civil measures and do not require a criminal trial or conviction.
What happens if I don’t respond to a forfeiture notice?
If you do not object within 30 days, the assets may be forfeited by default. It is crucial to act promptly if you receive notice.
Rising Reports of Crypto Fraud
Reports of cryptocurrency fraud are increasing. One recent article noted that Santander UK customers report approximately £1 million in crypto scams monthly. This trend underscores the importance of regulatory oversight and personal vigilance.
If you believe you have been victimized by a crypto scam, act quickly: secure your accounts, report the crime to authorities, and seek legal advice. Document all transactions and communications related to the incident.
Final Thoughts
The UK’s proactive use of Crypto Wallet Freezing and Forfeiture Orders demonstrates its serious approach to combating crypto-related crime. These powers have real financial consequences and are being actively enforced.
Whether you are a service provider, an investor, or someone accidentally entangled in an investigation, understanding these orders is the first step toward protecting your rights and assets. Always seek qualified legal counsel to navigate this evolving landscape.