Swedish gov’t pays out $1.5M in Bitcoin to convicted drug dealer

The Swedish prosecutor had argued in court that the man should be stripped of his illicitly earned Bitcoin at the equivalent value in fiat currency at the time of his conviction.

The Swedish government has found itself in the unforeseen situation of paying out around $1.5 million worth of Bitcoin (BTC) to a convicted — and then jailed — drug dealer.

Two years ago, the man was convicted in a Swedish court for having illegally earned 36 Bitcoin through online drug sales. Yet, Tove Kullberg, his prosecutor at the time, had used the Bitcoin’s equivalent value in fiat to make her case. The court, therefore, judged that the man should be stripped of his illicitly earned Bitcoin at its then-value of 1.3 million Swedish kronor ($100,000).

In the period following the man’s conviction and imprisonment, his crypto stash had appreciated to such an extent that the Swedish Enforcement Authority, tasked with auctioning off the 36 BTC, needed to sell off just 3 BTC to satisfy the court’s demands.

That now leaves 33 BTC, worth $1.5 million, which must be lawfully returned to its owner. Speaking to Swedish radio, Kullberg said that the way she chose to argue her case was, in retrospect, “unfortunate in many ways […] It has led to consequences I was not able to foresee at the time.” She added:

“The lesson to be learned from this is to keep the value in Bitcoin, that the profit from the crime should be 36 Bitcoin, regardless of what value the Bitcoin has at the time.”

Kullberg also stressed that as cryptocurrency continues to become ever more widely adopted, prosecution authorities would do well to invest in educating their workforce in the details of the industry. “The more we increase the level of knowledge within the organization, the fewer mistakes we will make,” she said.

Related: A legal asset after all? Governments are cashing in on seized crypto

Cryptocurrencies — whether due to their volatility or technical design — continue to challenge legal authorities and procedures worldwide. In the United Kingdom, a government-sanctioned task force recently proposed a dispute resolution framework that would help standardize the means of dealing with smart contract disputes. Due to the non-recognition of Bitcoin as legal tender or its surrogate, a Russian court last year ruled against restituting stolen crypto to the victim of a major crime.