The Bitcoin Treasure of Saxony: Who Gets the Money?

The German police are currently selling Bitcoins that they confiscated from Movie2k. But are they allowed to do that? And what happens to the money? Who receives it – Saxony, the federal government, the police? This treasure has already become a contentious issue in the state parliament.

The German police are currently selling Bitcoins that they confiscated from Movie2k. But are they allowed to do that? And what happens to the money? Who receives it – Saxony, the federal government, the police? This treasure has already become a contentious issue in the state parliament.

According to Arkham Intelligence, there are still 44,692 Bitcoins – around 2.6 billion euros – out of the 50,000 coins that the Saxony State Criminal Police Office (LKA) confiscated from the developers of Movie2k. This „Saxony treasure“ keeps jumping around the seven addresses of the Federal Criminal Police Office (BKA), landing on some exchanges and, mysteriously, flowing back from there to the BKA wallets.

The stock has, however, significantly shrunk, leading to the assumption that around 5,000 coins have been sold, which is roughly 300 million euros. Since this represents less than ten percent of the Saxony treasure, this is just the beginning.

Hence, a burning question arises: What happens to the money? Who is auctioning off the Saxony Bitcoin treasure? Where do the proceeds go, and who benefits from it?

The Legal Situation: The Money Goes to the Free State

First of all, the situation is not entirely clear, and the authorities are still reluctant to provide information unnecessarily. The online magazine Golem recently inquired at the BKA and heard that the General Prosecutor’s Office of Saxony was responsible. However, they refused to provide any information because the proceedings are still ongoing.

The legal situation concerning the handling of confiscated assets is relatively straightforward. MDR summarized it compactly in an FAQ: If something is confiscated in Saxony, the proceeds – the so-called asset recovery – go to the general state budget of the Free State of Saxony. If the goods exceed an amount of 500,000 euros, they go 52.5 percent – likely a maximum of five million euros – to the Ministry of the Interior and 22.5 percent to the Ministry of Justice. Unlike in many European countries, Germany does not have a fixed purpose for the proceeds.

The General Prosecutor’s Office of Saxony is responsible for the sale. The LKA and BKA are only involved for technical reasons but have no decision-making authority in the matter. When we observe transactions on the blockchain, the BKA is probably only executing them at the behest of the prosecutor’s office.

Confiscated assets can only be sold and transferred to the budget once there is a legally binding court ruling. In this case, it probably refers to the verdict against the operators of Movie2k, which has not yet been issued. This verdict might require that part of the proceeds go to the film industry affected by Movie2k.

It is, however, possible to initiate a so-called emergency sale under §111p StPO. The prosecutor’s office can order this if a confiscated item is likely to lose value rapidly, which can be argued for volatile Bitcoins.

Inquiries in the Saxony State Parliament

Some clarification on the Saxon internal perspective is brought by inquiries from state parliament members. On June 21, Saxon member of parliament Mario Beger from the AfD received a response to a minor inquiry about the „billion-scale treasure of 50,000 Bitcoins.“

The response outlines the legal situation that „provisionally secured assets“ can only „be used for the benefit of the state treasury“ once there is a legally binding court decision on the confiscation.

Alternatively, confiscated goods can also „be used for the benefit of the state treasury if the party involved has effectively waived them.“ Although the suspects have „voluntarily“ transferred the coins, this is unlikely to constitute a waiver. The suspects may have a reasonable case if they can negotiate a sentence reduction with an effective waiver of at least part of the assets. The movements on the wallets might indicate that this is exactly what happened.

The Saxon government does not wish to comment further on this point, as the proceedings are still ongoing. This response was from June 21. A few days later, the BKA wallets became active, with transactions to exchanges, which generally fueled the speculation that the BKA is now selling the coins. As far as we know, this would only be legal as part of an emergency sale to prevent the suspects from losing assets if they were to have their property returned after a court ruling.

However, the BKA might only be testing transfers from their wallets to the exchanges to be ready once a verdict is issued. This could also explain the mysterious transfers back from the exchanges.

On June 25, Marco Böhme from the Left Party responded to the alleged sale with an inquiry to the Saxon government. He suspects that parts of the „Bitcoin Saxony treasure“ have already been sold, asking how many coins, how many are still to be sold, and whether the government expects the Bitcoin price to crash

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