DOJ Crypto Freeze, Seizure &
Forfeiture Defense

The Scam Center Strike Force is a DOJ initiative formed in November 2025 by the U.S. Attorney’s Office for the District of Columbia. It targets cryptocurrency investment fraud operated from scam compounds in Southeast Asia, commonly called “pig butchering,” and the networks that launder its proceeds. Its founding partners are the D.C. U.S. Attorney’s Office, DOJ’s Criminal Division, the FBI, and the U.S. Secret Service. IRS Criminal Investigation, the Postal Inspection Service, the DEA, and several other U.S. Attorney’s Offices have since joined. The Departments of the Treasury, State, and Commerce support its work.

The Strike Force maintains a dedicated cryptocurrency seizure team. As of September 2026, it reported more than $938 million in cryptocurrency restrained and had announced its intention to pursue scam compounds worldwide. Scott Armstrong supervised DOJ prosecutors handling pig butchering and crypto investment fraud cases and directed a DOJ strike force.

Strike Force cases generally begin with a victim report to the FBI’s Internet Crime Complaint Center or with a victim identified through Operation Level Up. Agents trace the victim’s funds across the blockchain to addresses held at an exchange or stablecoin issuer capable of freezing them. In one 2026 Secret Service investigation, agents froze funds traced to six addresses. Agents then request that the provider freeze the assets. No judge reviews that request. To take custody, prosecutors obtain an ex parte seizure warrant under 18 U.S.C. § 981(b), frequently from a federal judge in Washington, D.C. The warrant typically rests on § 981(a)(1)(A), on the theory that the assets were involved in money laundering. DOJ then pursues forfeiture and may bring wire fraud or money laundering charges, often in coordination with Treasury sanctions.

Each stage depends on proof subject to challenge. The trace may misattribute a wallet or assign taint to legitimate funds in a commingled account. The freeze request rests on no judicial finding. The warrant affidavit must establish probable cause that the specific assets are forfeitable. A civil forfeiture complaint must state facts sufficiently detailed to support a reasonable belief that the government will be able to meet its burden of proof at trial under Supplemental Rule G(2)(f). The firm challenges the government’s proof from whichever stage the client’s involvement begins.

Scam proceeds pass through OTC desks, exchange hot wallets, payment processors, and bridges, where they are commingled with legitimate funds. A government trace may therefore end at an account whose owner had no contact with the perpetrators of the fraud.

The government’s forfeiture theory extends the reach of the trace. Under 18 U.S.C. § 981(a)(1)(A), DOJ contends that legitimate funds commingled with laundered proceeds were themselves “involved in” money laundering. That theory is limited by, among other requirements, the need to establish a substantial connection between the specific assets and the offense. The firm has represented clients in exploit, hack, and fraud matters involving more than $40 million in crypto assets.

In practice, yes, if the provider cooperates. A federal seizure warrant requires a judicial finding of probable cause under 18 U.S.C. § 981(b) or 21 U.S.C. § 853(f). Many freezes do not involve that step. Agents submit a request, and the exchange or stablecoin issuer freezes the assets under its terms of service. DOJ has stated that Strike Force restraints were achieved through voluntary actions by cryptocurrency providers as well as through legal process.

A voluntary freeze leaves the property in an uncertain legal posture. Because the government has not formally seized it, CAFRA’s notice deadlines may not apply. The firm requests that the government either obtain lawful process, which triggers notice and claim rights, or authorize release.

In many cases. Centralized stablecoin issuers can freeze tokens held at specific addresses at the smart-contract level. Tether reports cooperation with more than 340 law enforcement agencies and has frozen substantial sums at the request of U.S. authorities. The T3 Financial Crime Unit, formed by Tether, TRON, and TRM Labs, reported more than $450 million frozen by May 2026. The GENIUS Act requires issuers serving the U.S. market to maintain the technical capability to comply with lawful orders to seize, freeze, burn, or block transfers.

Issuers may require the requesting agency’s consent before lifting a law-enforcement freeze. The firm identifies the agency, provides evidence of ownership and source of funds, and requests that the government either authorize release or proceed by lawful process. If the government seizes the tokens, the matter proceeds as a forfeiture action. The firm has represented an international cryptocurrency exchange against a law-enforcement freeze of approximately $2.5 million in stablecoins.

Section 981(a)(1)(A) authorizes forfeiture of any property “involved in” a transaction in violation of the money laundering statutes, 18 U.S.C. §§ 1956 and 1957, or the unlicensed money transmitting statute, § 1960, and any property traceable to such property. It is the basis for many crypto seizure warrants. DOJ has described the Scam Center Strike Force’s restraints as cryptocurrency involved in money laundering.

DOJ relies on the provision because the “involved in” standard is broader than the proceeds standard. The government contends that legitimate funds commingled with scam proceeds facilitated their concealment and are forfeitable on that basis. The provision is subject to limits. The government must prove the predicate laundering offense, including knowledge. Under 18 U.S.C. § 983(c)(3), it must establish a substantial connection between the specific property and the offense. The firm challenges each element from the warrant affidavit through any forfeiture trial.

Government tracing relies on clustering heuristics that associate addresses and on attribution labels that assign ownership. Either may be inaccurate. When tainted funds enter a commingled wallet, the analyst must select an accounting method, such as first-in-first-out, last-in-first-out, pro rata allocation, or the lowest intermediate balance rule. The method selected can shift millions of dollars of alleged taint onto or off a particular account. Cross-chain swaps, bridges, and exchange internal ledgers interrupt the on-chain record.

In civil forfeiture, the government bears the burden of proof under 18 U.S.C. § 983(c). The fungible-property provision of 18 U.S.C. § 984 is unavailable in actions commenced more than one year after the offense. Scott Armstrong supervised DOJ prosecutors in pig butchering and crypto Ponzi cases that depended on tracing victim funds across the blockchain.

No. CAFRA’s 60-day notice requirement, 18 U.S.C. § 983(a)(1)(A)(i), applies only to nonjudicial (administrative) forfeiture. The Ninth Circuit confirmed that limitation in Omidi v. United States, 851 F.3d 859 (9th Cir. 2017). No notice is required if, within the 60-day period, the government files a civil judicial forfeiture action or obtains an indictment containing a forfeiture allegation. Where a state or local agency seized the property and transferred it to federal authorities, the period is 90 days. A voluntary freeze by an exchange or issuer is not a government seizure and may trigger no notice obligation.

The absence of a personal notice letter does not extend the claim deadline. Under 28 C.F.R. § 8.9, DOJ agencies such as the FBI may publish notice of a seizure on forfeiture.gov for at least 30 consecutive days. A claimant who does not receive a personal notice letter must file a claim within 30 days after the final date of publication. The firm monitors publication and docket activity for clients whose assets are frozen.

In an administrative forfeiture, the claim deadline is the date stated in the personal notice letter, which may not be earlier than 35 days after mailing. Absent a letter, the claim is due 30 days after the final publication of notice. 18 U.S.C. § 983(a)(2)(B). The claim need not take any particular form. It must identify the property, state the claimant’s interest, and be made under oath, subject to penalty of perjury. No bond is required. A timely claim terminates the administrative proceeding. The government then has 90 days to file a civil complaint or obtain an indictment containing a forfeiture allegation. If it does neither, it must return the property.

Failure to file a timely claim ordinarily results in administrative forfeiture without judicial review of the merits. Courts, including the U.S. District Court for the District of Columbia, have dismissed subsequent lawsuits for failure to exhaust the administrative claim. See Azabdaftari v. Mayer, 734 F. Supp. 2d 51 (D.D.C. 2010). In a judicial case, Supplemental Rule G(5) requires a verified claim by the date stated in the government’s direct notice. Section 983(a)(4)(B) sets the answer deadline at 20 days after the claim is filed, while Rule G(5)(b) provides 21 days. Filing within 20 days avoids the conflict.

Contesting a forfeiture requires sworn statements at several stages, including the claim, answers to special interrogatories under Rule G(6), and discovery. Each may be used in a related criminal case. In Strike Force matters, asset recovery and criminal investigation frequently proceed concurrently.

Section 981(g)(2) addresses this problem. The court must stay the civil forfeiture case as to a claimant who establishes that the claimant is the subject of a related criminal investigation or case, that the claimant has standing, and that continuation of the forfeiture case will burden the claimant’s right against self-incrimination. The stay is mandatory once those elements are established. It is available only after a judicial case has been filed, and it does not excuse the obligation to file a timely administrative claim. The firm structures each filing to avoid creating evidence for use in a criminal prosecution.

The innocent owner defense is a complete defense to civil forfeiture under 18 U.S.C. § 983(d). An owner whose interest existed during the illegal conduct must establish either a lack of knowledge of the conduct or that, upon learning of it, the owner did all that reasonably could be expected to terminate the illegal use of the property. An owner who acquired the property afterward must establish bona fide purchaser status for value, without knowledge and without reasonable cause to believe the property was subject to forfeiture. The claimant bears the burden by a preponderance of the evidence.

For exchanges and traders, the defense depends on the documentary record, including KYC files, trade confirmations, market pricing, and the handling of AML alerts. The firm develops that record at the outset of the engagement.

In some cases. Negotiated release is the most common avenue. CAFRA’s hardship provision, 18 U.S.C. § 983(f), also entitles a claimant to release upon a showing of a possessory interest, sufficient ties to the community, and substantial hardship, such as preventing the functioning of a business, that outweighs the risk the property will be lost or transferred. The request must accompany or follow a timely claim and must first be made to the seizing agency. If the property is not released within 15 days, the claimant may petition the district court in which the forfeiture complaint is pending or, if none has been filed, the district in which the seizure warrant was issued or the property was seized. For Strike Force seizures, that is often the District of Columbia. The court must rule within 30 days and may impose conditions, including a bond.

The statutory exclusions control many requests involving cryptocurrency. Section 983(f)(8) bars release of currency and electronic funds, a category courts may apply to cryptocurrency, unless they are the assets of a legitimate business. It also bars release of property to be used as evidence or likely to be used to commit additional offenses. For exchanges, OTC desks, and payment processors, the legitimate-business exception is the relevant avenue, and the firm develops the record to satisfy it. No early hearing is guaranteed. In Culley v. Marshall (2024), the Supreme Court held that due process requires a timely forfeiture hearing but not a separate preliminary hearing. Where no forfeiture case is pending, Rule 41(g) may support a motion for return.

Third parties may not intervene in the criminal case. Under 21 U.S.C. § 853(k), they must await the ancillary proceeding under § 853(n), which begins after the court enters a preliminary order of forfeiture. The petition is due within 30 days of the final publication of notice or of actual notice, whichever is earlier. The petitioner must establish a legal interest superior to the defendant’s at the time of the offense, or bona fide purchaser status without reasonable cause to believe the property was subject to forfeiture.

The ancillary proceeding may take years. The firm engages prosecutors before a forfeiture order is entered, documents the client’s interest, and negotiates the exclusion of legitimate assets from the forfeiture.

Not necessarily. Many freezes are directed at property rather than persons. Forfeiture is an in rem action, and DOJ may pursue it without charging anyone. Strike Force restraints are generally directed at recovering victim funds that passed through the frozen account.

A freeze may, however, precede a criminal investigation. Agents may follow a freeze with interview requests, subpoenas, or a target letter. Statements made in an effort to recover assets may be used as evidence. Transferring unfrozen funds may constitute an offense under 18 U.S.C. § 2232. The firm assesses criminal exposure before developing a recovery strategy.

Not absent proof of the required knowledge. Money laundering under 18 U.S.C. § 1956 requires proof that the defendant knew the property represented the proceeds of some form of unlawful activity. Section 1957 requires knowledge that the property was criminally derived. The government frequently relies on willful blindness to satisfy the knowledge element, which requires proof that the defendant subjectively believed there was a high probability of illegality and took deliberate steps to avoid confirming it. The Supreme Court articulated that standard in Global-Tech Appliances, Inc. v. SEB S.A.

These cases frequently turn on alleged red flags, including pricing inconsistent with the market, refusal to complete KYC, unusual transaction routing, and the defendant’s communications. The firm develops the evidentiary record of the client’s good faith. Scott Armstrong served as lead trial counsel in a Ponzi scheme trial involving approximately $650 million laundered through financial institutions.

Yes, subject to risks specific to foreign claimants. Under 28 U.S.C. § 2466, a court may bar a claimant who has notice or knowledge of an arrest warrant and deliberately avoids prosecution by remaining outside the United States. The bar may extend to a corporation whose majority shareholder or filing representative is a fugitive. A verified claim is made under penalty of perjury, and the government may serve special interrogatories under Rule G(6).

Each filing must account for parallel criminal exposure, including through a stay under 18 U.S.C. § 981(g) where its elements are met. The firm has defended a foreign national charged with wire fraud and money laundering conspiracy in a $260 million crypto theft case. It structures forfeiture strategy in light of the client’s overall exposure.

Domain seizures are typically effected by a warrant directing the registry to redirect traffic to a government seizure notice. They are typically premised on 18 U.S.C. § 981(a)(1)(A). Forfeiture of the domain ordinarily follows, and a challenge proceeds under CAFRA: by administrative claim if the agency proceeds nonjudicially, or by claim and answer in federal court if DOJ files a complaint. The Scam Center Strike Force seized 503 domains in a single April 2026 action.

The firm identifies the case and the prosecutors, determines the government’s theory, presents the exchange’s compliance record, and seeks release or contests the forfeiture. It also addresses the effect of the seizure on customers, banking partners, and regulators and evaluates any parallel criminal exposure, including under 18 U.S.C. § 1960. The firm has represented an international cryptocurrency exchange in connection with a DOJ and FBI domain name seizure.

These matters are decided on the evidence, and the firm’s attorneys built and tried cases at DOJ on the same categories of evidence. Scott Armstrong served as an Assistant Chief in DOJ’s Fraud Section, supervised prosecutors handling pig butchering and crypto Ponzi schemes, directed a DOJ strike force, and tried 16 federal jury trials, including a two-week trial involving approximately $650 million laundered through financial institutions. Drew Bradylyons served as Chief of the Financial Crimes and Public Corruption Unit at the U.S. Attorney’s Office for the Eastern District of Virginia.

The firm has represented international exchanges in a DOJ and FBI domain seizure and against a law-enforcement freeze of approximately $2.5 million in stablecoins. It has represented clients in exploit, hack, and fraud matters involving more than $40 million in crypto assets, and it has defended a foreign national charged in a $260 million crypto theft case. The firm’s attorneys have tried 25 federal jury trials, and the firm prepares each matter for trial. That preparation is how the firm identifies the defects in the government’s proof.