Swedish Government Forced To Pay Jailed Drug Dealer $1.6M In Bitcoin

The Swedish government has been ordered to return a jailed drug dealer's crime-obtained cryptocurrency assets currently worth over $1.6 million after they appreciated in value while he was in custody.

Prosecutor Tove Kullberg had successfully argued in court that the unnamed man should be stripped of his 36 illegally obtained bitcoin, which had been valued at around $136,000, the Telegraph reported. The value for each bitcoin would have been approximately $3,700 per piece prior to his release from custody, a report by Business insider said.

Bitcoin's value, however, had gone up over tenfold by the time the Swedish Enforcement Authority began auctioning off the assets, which meant that only three had to be sold to generate the amount demanded from the drug dealer, according to the Telegraph.

Online data showed that the value of a single bitcoin hovered at around $50,000 as of Monday.

The agency now has to return the remaining 33 bitcoin amounting to around $1,650,000 based on current prices to the man despite the currency being obtained from illegally sold drugs.

"It is unfortunate in many ways," Kullberg was quoted as saying. "It had led to consequences I was not able to foresee at the time," she added.

The prosecutor said the lesson to be learned from this incident is that the profit of the crime should be assigned to bitcoin itself, regardless of what value the cryptocurrency has.

"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. The more we increase the level of knowledge within the organization, the fewer mistakes we will make," Kullberg said.

The case was the first in Swedish legal history where cryptocurrency was seized, and there was no established precedent on how to treat bitcoin profits in court at the time, Kullberg pointed out.

Crimes involving cryptocurrencies have been a growing cause of concern for regulators and companies, as per Business Insider.

A report by the Bank for International Settlements, a Switzerland-based international financial institution, stated that tokens such as bitcoin are merely speculative assets that are being used for money laundering, ransomware attacks and other financial crimes.