German Authorities Seize $2 Billion Worth of Bitcoin

A German programmer who is accused of running an illegal movie streaming site more than a decade ago transferred $2.17 billion worth of Bitcoin to the authorities to repay at least some of the money he had made illegally, the police said on Tuesday. The transfer required the man to use his unique Bitcoin credentials to hand over the funds.

“This is the most extensive seizure of Bitcoins by law enforcement in the Federal Republic of Germany to date,” said Kay Anders, a spokesman for the Saxony state police. The money will remain in the authorities’ Bitcoin account until a court can figure out what to do with it, Mr. Anders added.

The man, identified only as a 40-year-old German citizen, and his business partner are under investigation on allegations that they ran what was once the country’s most successful illegal video-sharing site.

In its heyday, from 2008 to 2013, the site, movie2k.to, had tens of thousands of movies in a host of languages available for download. Users from around the world visited the site, making it among the 25 most-visited websites in Germany, according to news reports at the time. After the authorities shut it down in 2013, several sites with similar names opened to fill the void.

In the five years that movie2k.to was active, it allowed users to illegally download nearly 880,000 copies of films, the authorities said.

The police said the programmer had taken the profits from the site and invested it in Bitcoin, which soared to a value of more than 40,000 euros per coin.

The man, who made the large transfer several weeks ago, was arrested in 2019 and held in jail for months. He has been released while the investigation continues because he does not pose a flight risk, according to the police.

The authorities said the programmer had confessed to his role in the site and was working with them on the investigation, which was also helped by the U.S. Federal Bureau of Investigation. An indictment is expected soon.

Historically, criminals have converted their ill-gotten gains into Bitcoin to shield them from the authorities. Cryptocurrency funds can be stored on a private digital account, or even in a physical hard drive, that isn’t supervised by a bank, making them harder to seize. But in recent years, law enforcement officials have become better at tracking the flow of digital currencies and connecting anonymous digital accounts to people in the real world.

In this case, the man’s willingness to cooperate was important in the seizure, as it is with many attempts to recover cryptocurrency. Unlike regular money accounts, which are run by banks and can be seized with a search warrant, Bitcoin accounts require a user’s unique login credentials.

This month’s transfer to the authorities was not the first time the German man had given up at least a portion of his gains. In 2020, 10 months after he was first arrested, the man transferred €25 million worth of Bitcoin to the authorities.

David Yaffe-Bellany contributed reporting from San Francisco.