The Swedish government is being obligated to return roughly $1.5 million or (£1 million) worth of bitcoin to a drug dealer after the value of the digital asset appreciated while he was in custody, according to a report by Telegraph.
The unusual turn of events was caused by the fluctuating price of the world’s largest cryptocurrency.
Two years ago, when the Swedish Enforcement Authority seized 36 bitcoins from the drug dealer, the coins were cumulatively worth around $136,000, according to Telegraph. This puts each bitcoin at roughly $3,700 per piece.
At that time, Prosecutor Tove Kullberg successfully argued in court that the drug dealer should be stripped off of his illegally earned bitcoin. Kullberg, however, used the monetary equivalent to make her case at the time, not anticipating the pace at which bitcoin’s value would grow.
As of August 20, bitcoin was trading around $48,978 per coin. The asset has surged 66% year-to-date and 313% in the past 12 months. The value of the dealer’s 36 bitcoins from two years ago is equivalent to just three bitcoins now.
When the dealer was released, the authorities were going to auction off all 36 of their coins, but Kullberg’s arguments during the prosecution meant the state had only seized three coins worth.
Based on the prosecution, the government had to return 33 bitcoins – worth roughly $1.6 million as of publishing – despite knowing full well the illegal nature of where the funds came from.
Kullberg lamented this outcome, telling Swedish Radio that it was “unfortunate in many ways.”
“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 bitcoin has at the time,” Kullberg said. “It has led to consequences I was not able to foresee at the time.”
The prosecutor did add that this case was the first in the country’s legal history that involved cryptocurrency seizure and therefore had no legal precedent set by previous decisions.
“I think we should probably invest in an internal education in the [prosecution] authority, as cryptocurrency will be a factor we’ll be dealing with to a much greater extent than we are today,” she told Swedish Radio. “The more we increase the level of knowledge within the organization, the fewer mistakes we will make.”
Crimes involving cryptocurrencies have been a growing cause of concern for regulators and companies. Most recently, the Bank for International Settlement criticized the digital asset for its role in illegal activities.