Tracing, seizure and insolvency

Tracing and seizure by the criminal authorities

The transparency of public blockchains makes crypto-assets easier to trace than many traditional assets, provided that the investigators can link addresses to persons. The criminal authorities of the canton of Zurich have built up specialised capacity for this purpose. Their most spectacular case to date was announced on 1 December 2025. In late November the Zurich public prosecutor’s office II, the Zurich city and cantonal police, the Frankfurt Central Office for Combating Internet Crime and the German Federal Criminal Police Office shut down the servers of the bitcoin mixer Cryptomixer.io, which had operated from Zurich since 2016. They seized bitcoin worth about 23 million francs that served as the mixer’s working capital, as well as the domain and twelve terabytes of data. According to the prosecutors, the mixer had laundered proceeds from darknet trade, ransomware, fraudulent online shops and crypto thefts with a volume of more than one billion francs. Eurojust and Europol supported a joint investigation team of Swiss and German authorities.¹

The ordinary cases are smaller and more typical. In May 2026 the Zurich authorities reported on a romance scam in which a woman from the district of Winterthur had lost nearly 200,000 francs. The cantonal police traced the funds to a wallet, which was frozen in November 2025 at a crypto exchange based in the Seychelles. The assets, worth more than 800,000 francs together with other crypto-assets of suspected criminal origin, were transferred to an official wallet of the authorities and seized, after which the victim received her full loss back through the public prosecutor’s office III.² The case shows the typical sequence: blockchain analysis, identification of the exchange where the funds arrived, a freezing request to that exchange, transfer to a wallet controlled by the authorities and restitution to the victim under the rules of criminal procedure. Cooperation with foreign exchanges often works without formal mutual legal assistance, because the large platforms respond to freezing requests from recognised authorities. Where formal assistance is required, the rules described in chapter I.V apply.

Crypto-assets in insolvency

The insolvency of a crypto custodian raises the question whether the clients can recover their tokens or merely have a claim in the bankruptcy. Before 2021 the answer was uncertain, since crypto-assets are not movable things and the rules on the segregation of assets in bankruptcy were designed for tangible property and securities. The DLT Act answered the question with a new Article 242a of the Debt Enforcement and Bankruptcy Act, in force since 1 August 2021. Crypto-based assets held by the bankrupt debtor are segregated in favour of the client if the debtor had undertaken to keep them available for the client at all times and if they are either individually attributed to the client or attributed to a community of clients in a way that makes each client’s share clear. The costs of segregation are borne by the client. A new Article 242b grants third parties with a legal or contractual right to data held by the bankrupt estate a right of access to or delivery of that data.³ Parallel rules in banking law protect the crypto-assets of bank clients in the same way.⁴

FINMA has applied the principle to staking. In its Guidance 08/2023 of 20 December 2023 it stated that, until clarification by the legislature or the courts, staked crypto-assets are to be segregated from a bankrupt estate and returned to custody clients, provided that the institution manages the relevant risks and discloses them adequately. It identified technical risks, such as malfunctions or penalties for validator misconduct, counterparty risks where custody is delegated abroad and market risks arising from lock-up periods.⁵

The first large test of these rules came with an international collapse. After the failure of the FTX group in November 2022, its Swiss holding company for European operations, FTX Europe AG, filed for a Swiss moratorium. A Swiss court granted it on 11 April 2023 and appointed an administrator. The purpose was to facilitate a sale of the business under bidding procedures approved by the United States Bankruptcy Court, where FTX Europe AG was also a debtor in the Chapter 11 proceedings in Delaware.⁶ The European subsidiary, licensed in Cyprus, was later sold to Backpack Exchange, a firm founded by former employees of FTX and Alameda Research.⁷ The case showed how a Swiss holding company can become entangled in a global insolvency. It also illustrated that the Swiss rules on segregation protect clients only where the Swiss entity itself holds the assets in custody under the statutory conditions, which is often not the case in international groups.

Notes

1. Kanton Zürich, “Schlag gegen Krypto-Geldwäscherei: Server im Kanton Zürich stillgelegt, mehrere Millionen in Bitcoin beschlagnahmt”, media release, 1 December 2025, https://www.zh.ch/de/news-uebersicht/medienmitteilungen/2025/12/251201f_crypto.html. ↩
2. Kanton Zürich, “Sicherstellung von Krypto-Vermögenswerten”, media release, 26 May 2026, https://www.zh.ch/de/news-uebersicht/medienmitteilungen/2026/05/260526r_kryptosicherstellung.html. ↩
3. MME, “Aussonderung kryptobasierter Vermögenswerte und Zugang zu Daten im Konkurs”, https://www.mme.ch/de-ch/magazin/artikel/aussonderung-kryptobasierter-vermoegenswerte-und-zugang-zu-daten-im-konkurs. The article notes that segregation is not needed where the client retains direct access to the assets, for example through multi-signature arrangements. ↩
4. Article 16 number 1bis and Article 37d of the Banking Act (BankG), SR 952.0, as amended by the Federal Act of 25 September 2020 on the Adaptation of Federal Law to Developments in Distributed Electronic Register Technology, final-vote text at https://www.parlament.ch/centers/eparl/curia/2019/20190074/Schlussabstimmungstext%201%20NS%20D.pdf. The Act entered fully into force on 1 August 2021: Federal Council, “Federal Council brings DLT Act fully into force”, media release of 18 June 2021, https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-84035.html. ↩
5. FINMA, “FINMA publishes guidance on staking services”, media release, 20 December 2023, https://www.finma.ch/en/news/2023/12/20231220-meldung-am-staking/. ↩
6. PR Newswire, “FTX Europe AG Files Petition for a Swiss Moratorium Proceeding”, 12 April 2023, https://www.prnewswire.com/news-releases/ftx-europe-ag-files-petition-for-a-swiss-moratorium-proceeding-301795509.html. The press release does not name the court. ↩
7. The Block, “FTX EU acquired by Backpack Exchange, an exchange founded by previous FTX and Alameda employees”, 7 January 2025, https://www.theblock.co/post/333308/ftx-eu-acquired-by-backpack-exchange-an-exchange-founded-by-previous-ftx-and-alameda-employees. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.