I found a very interesting article in theNikkei newspaper evening publication dated July 12, 2018.
(Quotation from the article)
It appears that on the 12th, Hyogo prefectural police seized cryptocurrency equivalent to about 3,800 yen from a 59 year old man in the sameprefecture who was repeated delinquent in the payment of parking fines.According to the prefectural police traffic guidance section, this was thefirst time in the country where crypto currency was seized in relation to a parkingviolation.
Orders for seizure are normally levied on salariesor bank accounts, but the man in this case had no bank deposits or savings, andhis occupation was unknown, so the police seized his crypto currency. If he doesnot pay the relevant amount by the end of July, the dealer will exchange his cryptocurrency for cash at the current rate, and give such amount to the prefecturalpolice.
(end of quotation)
From the last sentence, I understand that theyseized crypto currency from an account that he opened at a crypto currencyexchange. Such seizure is similar to a seizure from a traditional depositsavings account, because remittance of crypto currency from the account can be stoppedby obtaining a court notice of seizure, which will be issued to the exchange.Therefore, although there are some theoretical problems, such seizure can inprinciple be carried out.
However, I am wondering about the case wherethe debtor does not deposit the crypto currency in the exchange's account, butputs the crypto currency in his own account (crypto currency wallet) that hemade by himself. Strictly speaking, a ‘crypto currency wallet’ is software thatmanages the password required for remitting crypto currency, and a wallet can easilybe made using a PC or smartphone. The password in a wallet gives orders to computersin different locations around the world which hold crypto currency information,in order to remit crypto currency to someone. As an example, rather than likehaving money in a bank account, this is more like the situation where you havecash in your own wallet. There is no third party such as an exchange, so acourt cannot deliver a seizure notice to a third party in respect of cryptocurrency.
In practice, can cash be seized from a debtor,utilizing a court execution officer? Of course the answer is yes. However, sincecrypto currency does not exist as a thing, even if you took a court executionofficer to the house of the debtor, the officer could not seize cryptocurrency. It may be possible if the debtor voluntarily told the officer therelevant password to the crypto currency wallet. But failing that, neither acourt nor creditors could obtain the debtors crypto currency. If a debtor has cryptocurrency in his own account (crypto currency wallet), we cannot use the usefullegal tool of ‘seizure’, and this raises some serious issues.
For example, consider the case of a debtorwho has been issued a court order to pay hundreds of millions of dollars. What ifhe converts his money into a crypto currency and transfers the money into acrypto currency wallet, instead of keeping the money in a crypto currency exchangeaccount? By such means he could escape ‘seizure’ and thereby avoid creditors. Currently there are premium sushi shops Ginza,as well as luxury hotels and home electronics shops, etc., which allow paymentin crypto currency. Our debtor couldcarry on a life of luxury, even with an outstanding court order to pay creditorshundreds of millions dollars. As isplainly clear, this would be a terribly unfair outcome.
I believe that a new law must introducedwhich provides criminal penalties for debtors who conceal funds held in cryptocurrency.
Whatdo you think?