Shocking Loophole: Crypto Theft Might Be Legal Under German Law

Berlin’s legal gray zone lets digital asset thieves slip through the cracks—while regulators scramble to catch up.

The Legal Wild West

Germany’s outdated statutes treat crypto like Monopoly money, leaving victims with few options. No jail time, no fines—just a shrug from the justice system.

Regulators Playing Catch-Up

Lawmakers are drafting new rules, but for now, hackers feast like it’s an all-you-can-steal buffet. Meanwhile, traditional finance gatekeepers clutch their pearls—and their ledgers.

The Irony

Banks get bailed out for reckless bets, but crypto holders? ‘Should’ve used a hardware wallet,’ says every smug Bitcoin maxi on X.

German Legal Loophole Allows Crypto Thief To Walk Free 

A man helped someone (the complainant) set up a crypto wallet to hold €2.5 million worth of certain tokens. 

The thief created the wallet and retained the 24-word recovery phrase. Unfortunately, the victim never changed that recovery phrase. 

Later, without authorization, he used the correct recovery phrase to transfer and potentially steal all the coins. The defendant was not authorized to MOVE the coins and gave false statements.

The Higher Regional Court of Braunschweig concluded that the defendant, since he used passwords he had legitimately set up and retained. 

Therefore, the action did not satisfy the requirement ofas defined under Germany’s Criminal Code.

Furthermore, the court ruled there was no deception involved, rejecting charges of computer fraud. 

Blockchain systems, the court said, do not assess. It only affirms the presence of a valid cryptographic signature. The court also dismissed claims of data tampering. 

This means that as long as someone has a valid password or recovery phrase—regardless of how they obtained it—transferring assets, at least under current German law.

The ruling effectively removes criminal liability for actions that WOULD otherwise be seen as theft in traditional finance. It highlights the legal system’s struggle to adapt to the technical structure of decentralized assets.

The court noted that while the conduct may violate civil obligations,. 

However, the ruling does not suggest that all crypto theft is legal. If credentials were obtained through fraud or hacking, different charges could apply. But this case centered specifically on non-technical access using pre-existing, known credentials.

For now, the judgment exposes a gray area that German lawmakers have yet to address.