Crypto Assets and Enforcement: A Dynamic Landscape
The world of digital assets used to be the preserve of cryptographers, cyberpunks, dreamers, hackers and organised crime groups. It operated on the fringes and was exploited by the likes of Ross Ulbricht – a US former felon convicted in 2015 of drug trafficking and computer hacking – to facilitate narcotics sales and arms dealing. In recent years, however, the tide has been turning and cryptocurrencies are becoming mainstream, presenting new opportunities for creditors and asset recovery experts to recover misappropriated funds from recalcitrant debtors.
The Changing Tide
Freed from the restrictions imposed by the Biden administration, seen by many insiders as overly draconian, digital assets are having their moment in the sun. Under US President Donald Trump, who has repeatedly vowed to make the United States the “crypto capital of the world,” cryptocurrencies such as Bitcoin and Ethereum have become an increasingly integrated part of the global financial economy.
Shortly after his inauguration, President Trump pledged “to support the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy.” He pardoned Ulbricht, who had served 12 years of two life sentences, appointed crypto-friendly regulators, and reduced regulation. A number of cryptocurrencies subsequently reached all-time highs, with Bitcoin surging to over $126k in October 2025, although the market has since subsided significantly amid acute geopolitical uncertainty.
Criminal organisations and rogue states, Russia and Iran included, continue to benefit from the pseudo-anonymity and highly efficient transactions afforded by blockchain technology. However, cryptocurrencies are increasingly being used by everyday investors to beat inflation, diversify their holdings, grow their savings pot, and send money in a borderless, censorship-resistant way. Adoption rates have been rising rapidly globally, particularly in countries suffering from currency debasement, such as the US, Nigeria and Pakistan.
Digital Assets as an Enforcement Target
A less expected consequence of the increasing use of digital assets is that they are becoming an attractive enforcement target for creditors. Whether seeking to obfuscate their assets by leveraging the blockchain’s relative anonymity (in comparison with, say, a wire transfer) or merely using cryptocurrency as a legitimate store of value, there is no doubt that many debtors have a new pressure point that is being exploited by tech-savvy asset recovery experts. As one senior litigation funding executive stated recently, “until now we have been focusing on real estate and corporate interests, but the future of enforcement lies in Bitcoin and other cryptocurrencies.”Until recently, the crypto industry was so unregulated that, according to one crypto recovery expert, you could reach out to a contact working for an exchange and ask them to freeze tokens on your behalf pending a civil or criminal action. This has started to change, though, against a backdrop of maturing regulation. In the UK, authorities now have statutory powers to seize, freeze, and forfeit crypto assets and can transfer them to law-enforcement controlled wallets. In the US, which has been implementing crypto-specific enforcement measures for over a decade, new digital asset laws are being enacted at an unprecedented rate. In October 2025, for example, California became the first US state to sign a law preventing the automatic liquidation of unclaimed cryptocurrency – all in the name of protecting law-abiding cryptoholders.
Other countries, including Australia, Vietnam, and the UAE, are also integrating crypto into financial law, developing fresh legal frameworks and oversight requirements.
Asset Recovery Strategies and Techniques
While governments typically have sweeping powers to investigate and, if needed, seize tokens in criminal proceedings, the tools available to creditors in civil disputes are typically more limited – but growing. Investigators often start by “tagging” wallets, allowing them to associate blockchain addresses with real-world identities. This is not easy in practice, but can be achieved by scouring the public domain, including online forums and news media, searching proprietary databases or obtaining non-public information through discreet enquiries with a debtor’s network.
Once this has been achieved, investigators can start tracing fund flows through the blockchain, an open-source ledger of transactions. “The blockchain is an incredibly powerful tracing tool,” noted Henry Burrows, founder of Hoptrail, a UK crypto wealth analytics firm. “The public nature of the blockchain, its immutability, and the fact that it isn’t fully anonymous – everyone transacts using unique digital identifiers – means that it is being increasingly leveraged for enforcement globally. Not only does it leave few places for bad actors to hide, it is a very reliable evidence base.”
According to Fred Buret, blockchain investigations manager at Recoveris, a crypto-focused recovery firm based in Switzerland:
“Blockchains are extraordinary records of transactions: their transparency and reliability mean misconduct can surface far more quickly than in traditional finance.
It took only a few years for the FTX fraud – where customer funds were misused for trading and acquisitions – to come to light, whereas Madoff’s Ponzi scheme ran for decades. That same transparency empowers investigators to map fraudulent flows in detail, identify assets on-chain, and monitor movements in real time. This creates opportunities to serve court orders on relevant counterparties and take coordinated steps aimed at asset preservation and recovery.”Creditors can obtain Norwich Pharmacal Orders in common law jurisdictions, such as the UK, and subpoenas and search warrants in the US, to compel disclosure from exchanges. Once the relevant assets have been identified, courts can issue turnover orders or third-party debt orders forcing a judgment debtor to relinquish identifiable crypto assets or hand over keys to satisfy a judgment. In certain cases, this may involve holding a mobile phone up to an individual’s face in court to unlock their wallet and ensure the assets are liquidated or transferred.
Recent examples include a high-profile federal case in Texas, in which, in January 2025 a judge ordered a convicted tax-evasion defendant to disclose private keys and identify all devices used to store his cryptocurrency so that government authorities could access and restrain assets valued at roughly $124 million. More recently, in March 2025, the UK’s HMRC reportedly obtained a freezing order from a UK Magistrates’ Court for about £1.5 million (~$1.9M) of crypto held in a Coinbase-hosted wallet.
In another notable UK case, Joseph Keen Shing Law v Persons Unknown & Huobi Global Limited (Commercial Court, England & Wales), heard in 2023, the English High Court ordered the operator of a cryptocurrency exchange to transfer tokens held in wallets outside the jurisdiction into England and Wales so that the claimant could enforce judgments against fraudsters who had absconded and could not be traced.
In complex civil disputes, a court can appoint a receiver to take control of crypto assets (especially in fraud actions or when assets are being dissipated) and liquidate them for creditor benefit.
Conclusion
There is no doubt that sophisticated debtors have historically been able to stay a step ahead of their adversaries, hiding their assets through obscure tokens and evading creditors via proxies. But as recent legislation and case law show, creditors and law enforcement agencies are starting to catch up – not just in tracing fund flows but actually recovering stolen monies from the debtors they often spend years tracking down and providing restitution to fraud victims. The recovery process can be further enhanced through the involvement of third-party funders, which give creditors – often suffering from litigation fatigue – the opportunity to share risk and cast their enforcement net wider via deeper pools of capital. This, in turn, enables them to invest more resources in sophisticated enforcement techniques, such as receivers and freezing orders.Cryptocurrencies are increasingly being enforced against in parallel with other assets, such as high-end properties and, in some cases, private jets and superyachts. However, the direction of travel suggests this shiny new asset class could seriously challenge these trophy assets as a key enforcement target and store of value in the years to come.
