Department of Justice to Re-evaluate Return of Victims' Assets in Crypto Crime Cases

On April 17, the Department of Justice (DOJ) said in a memo that it will revisit a practice: in cases involving fraud and theft, when digital assets are confiscated, they will be paid to investors at a price lower than the current market value. The memo mentioned that the Department of Justice has paid attention to some well-known bankruptcy cases in 2022, including FTX, Voyager Digital, Celsius Network, Genesis Global, BlockFi, and Gemini Trust. While not all of these bankruptcies involved criminal charges, the Department of Justice pointed out that many of these cases resulted in investors losing digital assets due to "fraud and theft." In addition, the Department of Justice also pointed out that the value of these digital assets has increased significantly in the following years. However, the court's approach is not motivated by a desire to inflict pain on creditors. The problem is that current US bankruptcy rules require confiscated assets to be returned to victims at their dollar value at the time of the fraud. While this may seem unfair, experts say there are important reasons behind the rule, and that changing it could be very difficult.