Topic: Asset forfeiture and bitcoin (US) (Read 1369 times)

I think they would need advanced knowledge as to "where" he is holding his bitcoin. Unless they have reason to believe that the computer was obtained illegally they would not be able to seize/search the computer without a probable cause warrant. I would also say the fact that the private key to the address that contains the inputs from the transaction in question is in his hot wallet or cold storage would not matter. If law enforcement is able to seize any computer equipment (assuming they have a warrant to do so) then the fact that a computer had not previously touched the internet would not matter. This is somewhat similar to a thread from a few months ago that was discussing how you would keep your bitcoin safe if you were going to jail/prison.
This is a serious problem with asset forfeiture laws. It is not uncommon for people to have their assets seized for crimes they were not prosecuted for. Hopefully congress and the various state/local legislatures will change these laws. 
This depends on the asset forfeiture laws as stated above. I think it is interesting to note that (if memory serves me right) the majority of asset forfeitures are not contested but when they are the citizen almost always gets their property back.

I was under the impression that they started using his laptop immediately after they took it and arrested Ross. I was also under the impression that they were not able to steal/transfer Ross's bitcoin immediately (IIRC it was rumored that they were stored in a brain wallet) and that they got his bitcoin several weeks(?) later, likely from cracking his password or ticking him into entering it

He deff needs to face justice one way or ANOTHER!

o.O That was fantastically lucky of them for Ulbricht to use such a high timeout number that they could do anything with it before it relocked. I'm sure the forfeiture defense will be fascinating. Thanks for response.

In the Ulbricht case, they grabbed the laptop while it was powered on and the wallet was unlocked.  Then they transferred the bitcoins to a different address that they control.

Ulbricht has contested the seizure, so if he is acquitted then there will be a separate hearing on the seized property.

Bill buys all his bitcoin from a large mining farm nearby from a guy he knows (Ned), who is neither a registered money transmitter nor does he even bother to record the transactions.

A law enforcement agency (LEA) with assset forfeiture powers are made aware of the transactions and, in one way or another, records a few transactions occurring. The LEA determines Bill's entire stash of bitcoin was obtained illegally, as well as Ned's USD. Ned deposits his cash at the bank, so that's gone, but what about Bill's bitcoin? Let's say Bill keeps his coin on a hot wallet on his PC and does not use any obfuscation to enter his password in, or perhaps he keeps the password in a "password journal" next to his PC. What would be the best way for the LEA to proceed in seizing Bill's bitcoin while acting in an arguably legal manner without giving Bill a chance to move the coins to a secure cold wallet (assume seizing his PC and other electronics in the house aren't enough to stop Bill)? I'm mostly curious about how the timing of this operation on the LEA's side would work out.

Let's say the LEA eventually drops the case against Bill and Ned (because the LEOs are feeling generous, and Bill and Ned seem too White to be in prison, anyway), but do not drop the case against their property.

Bonus question: does Bill have any chance of recovering the coins if he does not have a paper trail showing purchases came from money transmitters using USD for which he is able provide credible and legitimate sourcing from?