Crypto Assets in Confiscation Proceedings
Gary Bloxsome, co-head of our dispute resolution team and Senior Associate, Jennifer Richardson recently represented an individual who found themselves at risk of losing significant sums of crypto assets as a result of ongoing confiscation proceedings brought against a separate individual by the CPS and NCA.
There was no suggestion whatsoever that our client had any involvement in the substantive criminal proceedings which led to confiscation proceedings being brought under the Proceeds of Crime Act 2003. However, a financial investigation conducted by the NCA led them to believe that a significant sum of crypto-currency which was currently in the possession of our client, in fact belonged to the defendant who had been convicted of serious criminal offences in 2019, and that it was therefore an available asset which could be used to satisfy his confiscation order.
After undertaking our own investigations in order to trace the source of the crypto-currency, and after a series of complex negotiations with the Crown Prosecution Service we were able to ensure that our client retained over £7million worth of crypto currency which was in his possession.
Blackfords LLP routinely represent individuals who find themselves inadvertently being brought into confiscation proceedings relating to another individual.
Where confiscation proceedings are commenced against an individual who has been convicted of a relevant offence, the prosecution will seek to undertake a financial investigation to identify assets belonging to them which are ‘available’ to satisfy a confiscation order. Often these may include their share of joint assets (such as matrimonial property) and in some more complex cases this can include assets which are in the possession and control of a third party, but which the prosecution say belong to the defendant beneficially.
Where for example an individual has been transferred significant sums of cash, crypto-currency or property by the defendant during the relevant period applicable to the confiscation proceedings, it will be for the defendant, and that third party, to prove that the beneficial interest in those assets has passed to the third party and is no longer vested in the defendant. Failure to do so could result in those assets being included in the defendant’s confiscation order, and the third party eventually having to relinquish them to satisfy that order.
In many cases this can be done either by demonstrating that reasonable consideration was given for those assets- for example where the defendant transfers a property to an individual they may be able to demonstrate that they paid a reasonable amount in exchange for it.
Alternatively, it may be that the third party has always owned that property, and that there is a good and justifiable reason why, for a period of time, it was in the possession of the defendant before being transferred back to the third party. For example, where an individual gives crypto-currency to the defendant to trade, always on the understanding that it would one day be returned to them.
In cases such as these involving Crypto assets, a complex tracing exercise will often be required in order to demonstrate original ownership of those assets. Blackfords LLP work closely with several experts in order to undertake this exercise and utilise the results in order to ensure that our clients retain their assets in such proceedings.
