Cryptocurrency is more and more showing in felony instances all over the world. Many attorneys have dealt with situations the place digital property are both concerned in an offense, function a supply of earnings, or are implicated in an arrest.
Take into account a standard state of affairs: throughout a search, a suspect’s smartphone is seized, on which the Belief Pockets software and a number of screenshots with seed phrases are discovered. The detective and the prosecutor insist: that is proof of possession of cryptocurrency. Nonetheless, is that this ample to set up guilt in a courtroom of regulation?
In contrast to money or property, cryptocurrency can solely be traced by means of digital footprints. Crypto-assets usually haven’t any bodily medium and are solely accessible by means of digital keys.
Due to this fact, an efficient protection technique requires information of know-how, the specifics of the proof base, and judicial observe.
On this article, we are going to discover the varieties of proof ceaselessly utilized in cryptocurrency-related instances, how investigative judges from the Supreme Court docket of Criminal Appeals assess them, and the methods the protection can make use of to both affirm or contest claims of digital asset possession.
The Historical past of Authorized Regulation: The place We Are At present
The dearth of complete authorized regulation presents a number of issues in the felony course of. First, it’s troublesome to decide an asset’s authorized standing—whether or not it’s property, profit, or proof. Second, attorneys and judges are compelled to depend on judicial observe and technical experience reasonably than on a transparent legislative framework. This makes proving or disproving crypto-assets’ possession a extra complicated and usually controversial job.
Though Ukraine is actively growing the digital economic system, the legislative framework governing digital property stays incomplete. That is particularly essential given the rising variety of felony instances involving cryptocurrency. Unofficial professional estimates recommend that greater than 70 such instances had been recorded in 2024 alone. Under are the important thing milestones in the formation of authorized regulation for digital property.
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2017: The Nationwide Financial institution of Ukraine (NBU), in an announcement, acknowledges that cryptocurrency will not be a authorized tender and doesn’t have the standing of forex in Ukraine.
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2018: (1) A number of draft legal guidelines on digital property (No. 7183, No. 7183-1) had been registered in the Verkhovna Rada, however none had been adopted; (2) The Nationwide Securities and Inventory Market Fee and the Ministry of Finance are forming working teams on the authorized standing of cryptocurrency.
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2020: The Ministry of Digital Transformation is growing a draft Regulation “On Digital Belongings.” For the primary time, the draft regulation formalizes the idea of “digital asset,” notably cryptocurrencies, as its kind.
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September 8, 2021: The Verkhovna Rada adopts the Regulation of Ukraine “On Digital Belongings” (No. 3637).
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March 15, 2022: The President indicators the Regulation “On Digital Belongings.” The regulation was to come into pressure after amendments to the Tax Code, which haven’t but been adopted.
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2023–2024: The Ministry of Digital Affairs declares the preparation of a brand new draft regulation harmonized with the European MiCA (Markets in Crypto-Belongings) regulation.
As of April 2025, the Regulation of Ukraine “On Digital Belongings” has not but entered into pressure due to the shortage of tax amendments. Cryptocurrency regulation stays decentralized, and is especially carried out by making use of basic provisions of the Civil, Tax, and Criminal Codes.
On the similar time, regulation enforcement companies in felony instances involving crypto-assets desire proof of sensible possession reasonably than separate norms of particular laws.
Because of this legal professionals working with such instances should depend on case regulation, the technological options of the property, and the specifics of every particular person supply of proof.
The next part offers a assessment of particular proof associated to these instances.
1. Declaration: When an Entry in a Declaration on the NACP Portal Can Turn into Proof
In accordance to the Regulation of Ukraine “On Prevention of Corruption”, declarants are obliged to point out the cryptocurrencies they personal. Getting into such knowledge in the declaration can function unbiased proof of possession, however requires affirmation—for instance, entry to a pockets or indicating the general public deal with of the cryptocurrency.
A call by the investigating judges of the HACC Appeals Chamber, dated Might 9, 2023, in case No. 991/2399/23, states that the one acceptable method to verify possession of the declared cryptocurrency is to exhibit entry to the crypto wallets containing the cryptocurrency and to present the general public addresses the place the cryptocurrency was initially saved.
2. The Smartphone Is The #1 Supply of Proof.
Detecting traces of crypto-asset use on digital units is among the key types of proof.
Most proof concerning cryptocurrency is recovered from the suspect’s private devices like telephones, tablets, laptops. They embrace:
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put in crypto purposes (Belief Pockets, Binance, and many others.);
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screenshots or pictures of seed phrases;
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correspondence about transactions;
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saved keys;
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account login historical past.
It’s such proof that turns into decisive, in specific, in accordance to the ruling of the investigating decide of the Supreme Court docket of Justice of Ukraine dated October 4, 2022, in case No. 991/3721/22, the very fact of possession of cryptocurrency was confirmed by the presence on the suspect’s telephone of pictures of seed phrases and correspondence concerning transactions that coincided with exercise at public addresses.
Equally, the decision of the Supreme Court docket of Justice of Ukraine dated November 27, 2024, in case No. 991/1512/23 established that the presence of cryptocurrency purposes, the historical past of their use, and pictures of seed phrases on a cell phone point out that the accused is the proprietor of the crypto wallets and, accordingly, the property contained in them.
3. {Hardware} Pockets or Seed Phrase?
A transparent place has already been established in judicial observe: possession of a digital asset is acquired in the intervening time the asset is created. The conclusion and execution of a transaction concerning the digital asset is validated by possessing the personal key related to that digital asset.
The presence of a {hardware} pockets, similar to a Ledger or Trezor, might point out possession of the cryptocurrency saved on it, however provided that the person has management over the pockets. Such management might, in specific, be confirmed by possessing the mandatory passwords or a seed phrase for the pockets.
As well as, when a person’s seed phrase is found, discovering a {hardware} pockets or some other medium the place the cryptocurrency is saved is pointless.
This appears fairly logical, for the reason that seed phrase is a set of phrases required to restore the pockets. It’s generated on the person’s gadget when creating the pockets and stays unchanged all through use.
Utilizing the seed phrase, one can entry the crypto pockets and its property from nearly any gadget (telephone, pill, and many others.) with out figuring out the entry password or personal key. Even in the occasion of lack of the bodily gadget (ledger or different), entry to the pockets and its property is preserved.
The choice of the HACC Appeals Chamber investigating judges dated October 31, 2024, in case No. 991/10335/23 clearly states that “the proprietor of the digital asset key (pockets entry code and password) is the proprietor of such a digital asset.”
4. Crypto Exchanges As Digital Passports.
Following worldwide anti-money laundering laws necessities, crypto exchanges conduct person identification (KYC) and retailer customers’ private knowledge similar to passports, photograph, mailing deal with, telephone quantity, and many others. This knowledge could also be required throughout the framework of felony proceedings and point out the particular person’s reference to the accounts the place the property are saved.
In accordance to the ruling of the investigating decide of the Supreme Court docket of Justice of Ukraine dated 04.10.2022 in case No. 991/3721/22, the investigation established that the suspect’s cell phone contained the WhiteBIT and Binance exchanges, which require private knowledge for registration. This turned an argument in favor of creating the very fact of possession of crypto property.
5. Public Handle Is By no means Sufficient.
Though the blockchain is public and anybody can see transactions on an deal with, this doesn’t show possession. With out proof of personal key possession, a public deal with can solely be a part of the proof. The following step could also be confirming KYC verification on a crypto trade or investigating transactions with different recognized wallets.
On the similar time, a public deal with could also be ample to verify the absence of property or to examine transactions in the blockchain (establishing the date of asset disposal, acquisition, and many others.).
The choice made by the investigating judges of the HACC Appeals Chamber dated 09.05.2023 in case No. 991/2399/23, states that merely offering the general public deal with of a cryptocurrency pockets is inadequate proof to establish the cryptocurrency proprietor. This ruling highlights the need of presenting extra proof, similar to a personal key or seed phrase, to verify possession of crypto property.
6. Blockchain Analytics: Highly effective Software For Each Sides.
In 2023, over 250 NABU detectives and analysts underwent a nine-month coaching on investigating crimes involving digital property. There, they realized fashionable analytical search strategies, rules of utilizing OSINT instruments for crypto investigations, and algorithms for analyzing and learning the motion of digital property.
For protection counsel, which means utilizing know-how and the assistance of digital specialists is an integral element of the protection technique. A number of instruments can help with unbiased analytics and data gathering, together with:
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Chainalysis: A number one platform for analyzing blockchain transactions, extensively utilized by US regulation enforcement.
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Elliptic: Efficient for detecting connections between addresses.
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Blockchair: Offers abstract details about transactions.
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Arkham: Permits you to deanonymize customers by means of connection analytics.
Investigators in Ukraine already make the most of these providers, and attorneys may also flip to them for unbiased evaluation. This unbiased evaluation might present grounds for refuting accusations or altering case {qualifications}.
In our work, we used a number of instruments for unbiased evaluation of transactions, documenting information which have evidentiary worth in felony proceedings. These findings additionally turned the idea for conducting a forensic pc technical examination. And it was the forensic examination that allowed us to set up the technical circumstances associated to cryptocurrency transactions, decide their origin, and set up that they belong to a particular particular person.
Nonetheless, earlier than commissioning a examine, we suggest consulting a number of digital forensics or IT analytics specialists with particular information in blockchain applied sciences. Since these research will not be but mainstream, every professional’s imaginative and prescient of conducting them and analysis strategies will differ.
Fast ideas for attorneys:
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Research the digital knowledge on the shopper’s smartphone. It’s a key supply of knowledge.
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Test whether or not the particular person really has entry to the personal key and seed phrase, and whether or not they have transferred such knowledge to third events, as a result of it is a matter of management, not formal possession.
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If crypto exchanges seem, get the entire knowledge from the accounts.
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Don’t ignore analytical instruments—they will work to your benefit.
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Look extra broadly—a declaration or public deal with doesn’t equal undisputed possession.
As an alternative of a Сonclusion, or Is It Potential To Stay Simply an Legal professional?
Proving possession of cryptocurrency is a technical and authorized job.
And though authorized regulation continues to be being fashioned, we will already speak about steady approaches in judicial observe. For a protection legal professional, this implies fixed monitoring of selections, mastery of digital instruments, and analytical considering. Work with IT specialists, contain specialists in blockchain analytics, affect the event of observe, and don’t keep away from complicated technical points, as they’re the important thing to a profitable protection.
In spite of everything, the one who first discovers the hint wins in the digital conflict for justice.
