The Swedish government found itself in the unforeseen situation of paying around US$1.5 million in Bitcoin (BTC) to a drug dealer who was convicted – and then arrested.
Two years ago, the man was convicted in a Swedish court of illegally earning 36 Bitcoins from selling drugs online. However, Tove Kullberg, the prosecutor at the time, had used the equivalent amount of Bitcoin in fiat to defend her position. The court therefore ruled that the man should be stripped of his unlawfully earned Bitcoin worth 1.3 million SEK ($100,000).
In the period following the man’s conviction and imprisonment, his crypto stock had risen to such an extent that the Swedish Enforcement Authority, in charge of auctioning the 36 BTC, had to sell only 3 BTC to satisfy the court’s demands.
That leaves 33 BTC, worth US$1.5 million, which must be legally returned to its owner. Speaking for Swedish radio, Kullberg said that the way she chose to argue her case was, in retrospect, “regrettable in many ways. […] This led to consequences I was not able to foresee at the time.” She added:
“The lesson to be learned from this is to keep the Bitcoin value, that the crime proceeds should be 36 Bitcoin, regardless of the Bitcoin value at the time.”
Kullberg also emphasized that as cryptocurrency continues to be increasingly widely adopted, prosecuting authorities would do well to invest in educating their workforce on the details of the industry. “The more we increase the level of knowledge within the organization, the fewer mistakes we make,” she said.
Cryptocurrencies – whether due to their volatility or technical design – continue to defy legal authorities and procedures around the world. In the UK, a government-sanctioned task force recently proposed a dispute resolution framework that would help standardize the means of handling smart contract disputes. Due to the non-recognition of Bitcoin as legal tender, a Russian court ruled last year against returning stolen cryptocurrencies to victims of serious crime.
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