Direct from the desk of Dane Williams.
Yes, Bitcoin can be seized by governments or police… But only IF they can get their hands on the private keys.
Following the latest seizure related to the 2016 Bitfinex hack, the US government now owns $3.6 billion worth of Bitcoin.
From this, to Canada’s convoy of truckers and now to the war in Ukraine, the question of how Bitcoin (BTC) can be seized by not only governments, but any third part has come back up.
I answer the question in simple terms, making sure to stress that the security of the entire Bitcoin network is never actually in doubt.
In 100% of the cases, it comes down to a lack of personal security or will to keep your own private keys safe.
Can governments seize Bitcoin?
The concept of Bitcoin seizures is exactly the same as the answer to can Bitcoin be hacked?
“No. While an individual’s private keys may be gained by a hacker, the Bitcoin network itself cannot be hacked.”
Can you see the difference here?
No government or law enforcement agency, such as the police or the FBI, can ever forcefully seize your Bitcoin from the network itself.
There is no back door that allows crypto to be confiscated by those in government.
This is not the legacy banking system where all the government needs to do is ask the bank to hand over the cash and it will happen.
Nope.
The only way for Bitcoin to be seized by governments or any other bad actor, is for them to gain access to your private keys.
Keys that are entirely in your control and therefore entirely your responsibility to secure and look after.
Remember the old saying:
Not your keys, not your crypto!
How did government seize the Bitfinex hack Bitcoin?
When it comes to how the government seized Bitcoin from those two muppets who were laundering money taken in the 2016 Bitfinex hack, the story actually isn’t very exciting.
It turns out that the government was able to seize Ilya Lichtenstein and Heather Morgan’s Bitcoin because they were stupid enough to put their private keys in a txt file and store it on Apple iCloud.
The government knocked on Apple’s door, who handed them back the password to their storage and there the keys to $3.6 billion worth of Bitcoin were sitting.
Gift wrapped in a pretty bow.
The way that the government was able to seize Bitcoin in this way is so hilarious, it's almost sad.
But as you can again see, the only way for Bitcoin to be seized by governments or law enforcement like the police, is for them to gain access to your private keys.
Just like we saw here, in 99% of the cases where the government was able to seize Bitcoin, it was due to the fact that those under investigation had terrible personal cyber security.
If you even have $50 worth of Bitcoin, don’t store your private keys on a txt file.
Let alone if you have $3.6 billion worth of someone else's Bitcoin.
Jesus…
Let's just say that you'll certainly be sorry when Bitcoin reaches $100K!
Final thoughts on Bitcoin seizures by governments
As the old saying goes, you’re only as secure as your weakest link.
And in the case of Bitcoin, YOU are that weak link.
When push comes to shove, the Bitcoin network itself is water-tight secure.
But you’re not.
The permissionless, decentralised nature of the network, means that Bitcoin can’t be stopped.
Ultimately it is your personal responsibility to ensure that you and your personal cyber security is up to scratch and your Bitcoin will always remain secure.
Unable to be seized by governments or police.
Best of probabilities to you.