Crypto Ownership

The legal situation regarding crypto fraud varies greatly depending on the jurisdiction. In Germany, the regulation of cryptocurrencies and related fraud cases is still evolving. However, there are some fundamental legal principles that victims can rely on.

In Germany, the Civil Code (BGB) governs ownership claims of stolen goods. Specifically, the provisions in Sections 935 to 937 BGB are relevant. According to Section 935 BGB, it is not possible to acquire ownership in good faith of stolen, lost, or otherwise misplaced property. This means that if an item has been stolen, the original owner remains the rightful owner and can demand its return, even if the purchaser acquired it in good faith. Sections 936 and 937 BGB contain additional provisions regarding acquisition of ownership through prescription and the rights of third parties.

In practical terms, this means that although perpetrators may dispose of your crypto assets, they will never, under any circumstances, acquire a legal ownership right over these assets.
Through blockchain analysis, it is possible to trace where perpetrators have transferred your crypto assets. Crypto exchanges play an important role in identifying and recovering stolen cryptocurrencies. If stolen crypto assets are transferred to an exchange, the operators can identify the perpetrators using account data, especially for large sums that require full verification. Lawyers and investigators can then take legal action to enforce the return of the stolen assets.

If assets are located in a wallet, this wallet can be flagged by regulatory authorities, financial institutions, and law enforcement agencies. We also offer this service to our clients. As a result, it becomes impossible to exchange these flagged crypto assets into fiat currency at a legitimate exchange.

Victims of crypto fraud can and should initiate criminal proceedings against the perpetrators. Law enforcement authorities must prove that a fraudulent act has occurred and that the perpetrator acted with intent. This process can be supported through forensic investigations and the analysis of blockchain transactions to trace the flow of funds.

In addition to criminal proceedings, victims can assert civil claims to recover their lost assets.

These include:

• Compensation: Victims can file claims for financial compensation for the losses they have suffered.
• Recovery: Victims can attempt to recover the stolen assets through court orders.
• Breach of contract: If the fraud was committed through a breach of contract, victims can take legal action based on that breach.

Victims of crypto fraud should take several steps to strengthen their position and prevent future incidents of fraud.

These steps include:

• Documenting the loss and collecting all relevant evidence
• Filing a criminal complaint with local authorities
• Contacting a lawyer specialized in crypto law
• Using blockchain analysis to locate the cryptocurrencies and label them as “fraud”