UK courts have frozen up to £6 million in cryptocurrency as authorities clamp down on illicit digital transactions

A significant crackdown on illegal digital transactions has seen up to £6 million in cryptocurrency frozen by the courts since new powers were introduced last year.

Criminals have increasingly turned to digital currencies like Bitcoin to launder money, evade taxes, and even fund terrorism, prompting authorities to take action.

This move comes as part of an effort to combat what is seen as a growing threat in the digital world.

New Measures Target Digital Criminal Activity

In April 2024, UK authorities launched a crackdown on the use of digital currencies for illicit purposes, granting law enforcement agencies and the HMRC the ability to freeze suspicious cryptocurrency wallets.

Under these new powers, suspicious wallets can be frozen for up to three years, allowing time for investigations to determine if the funds are being used illegally.

If the courts are satisfied that the funds were illicitly gained, they can be seized.

A recent analysis of court documents revealed that the largest freezing order so far was for £1.5 million worth of cryptocurrency, held in a single wallet hosted by US-based Coinbase.

The actual owner of the wallet remains unknown, but the order, which was issued on March 18 by Newcastle Upon Tyne Magistrates’ Court, was requested by HMRC, raising the possibility of tax evasion.

Experts Weigh In on the New Regime

While the total amount of frozen crypto might seem small compared to the billions in daily crypto transactions worldwide, legal experts point out that the new measures are still in their early stages.

Nick Barnard, a crypto law expert at Corker Binning, emphasized that the regime, which began in April 2024, needs time to fully develop and increase its impact.

Despite the relatively modest figures, lawyer Siobhain Egan of Lewis Nedas Law believes the UK government is now investing significantly in freezing crypto assets as part of a broader effort to combat money laundering and terrorism financing.

Egan warns that this could be just the beginning, predicting a “tsunami” of crypto-freezing orders as authorities ramp up their efforts.

Authorities Freeze Crypto to Disrupt Criminal Networks

The new powers allow investigators to apply for freezing orders on cryptocurrency wallets of suspected criminals without their knowledge.

This prevents the accused from moving their digital assets while investigations are ongoing.

Egan explained that these measures are particularly effective in disrupting organized crime groups.

For example, if the authorities suspect a major money laundering operation involving crypto, they can seize the assets before the investigation is completed, which can aid in building a stronger case.

She also noted that this is closing significant gaps in the investigative process.

The Surge in Illicit Crypto Transactions

Crypto is increasingly being used for illicit purposes.

In 2024, an estimated £39.8 billion worth of illicit transactions were carried out worldwide using digital currencies.

This is a record high and marks a sharp increase from the previous year, excluding the billions lost in the FTX scandal involving founder Sam Bankman-Fried.

Many of these transactions are linked to crimes like drug trafficking and money laundering.

Criminals are also shifting away from using Bitcoin in favor of “stablecoins” such as USDT, which are pegged to traditional currencies like the US dollar, making it harder for authorities to track these illicit activities.

Resources for Crypto Investigations Remain Limited

Despite these growing concerns, experts argue that many law enforcement agencies still lack the resources and understanding needed to effectively tackle crypto-related crimes.

Barnard points out that traditional fraud and money laundering methods are often easier to investigate because many investigators are more familiar with conventional banking systems than with digital currencies.

While most of the crypto freezing orders in the UK target assets held on exchanges like Coinbase, Kraken, and Binance—where the exchange provider has control over the wallet—personal crypto wallets stored on private devices remain harder to access.

High-Profile Cases Show the Impact of Crypto Seizures

One notable case involved Jian Wen, a Chinese takeaway worker whose Bitcoin holdings were seized last year in the largest crypto bust in history.

Wen, who had been living a modest life in the UK, had amassed Bitcoin worth £4.5 billion by laundering funds from a multi-billion-pound investment fraud.

Her lavish lifestyle—complete with expensive shopping sprees and plans to buy luxury properties—caught the attention of authorities, leading to her arrest and conviction for her role in the crime.

Wen’s case highlights the growing concerns over the use of crypto for large-scale criminal enterprises, as well as the increasingly sophisticated methods used to launder illicit funds.

The UK government is keen to keep pace with these developments to ensure that crypto doesn’t become a tool for criminals to evade justice.

The Global Fight Against Crypto Crimes

As the UK steps up its efforts to tackle illicit crypto transactions, it is part of a global push to curb the misuse of digital currencies.

With the rapid growth of the crypto market, governments and law enforcement agencies are facing new challenges in their attempts to regulate and control the flow of digital assets.

But as more resources are dedicated to these investigations, experts like Egan believe that crypto-freezing orders will continue to increase, helping to dismantle criminal networks operating in the digital space.