Florida Sheriff Ordered by Court to Return Over $700K in Seized Crypto—Here’s What Went Wrong

• How Did a $20K Fraud Investigation Lead to a $700K Crypto Seizure?
• Why Did the Brokerage Fight Back?
• What Legal Mistakes Were Made?
• What Happens Next?
• FAQs

In a landmark ruling, a Florida court has ordered the Volusia County Sheriff’s Office to return more than $700,000 in wrongfully seized cryptocurrency—plus legal fees—to a licensed EU brokerage firm. The case, which began as a $20,000 fraud investigation in Wisconsin, spiraled into a jurisdictional and procedural mess, raising serious questions about law enforcement’s handling of crypto assets. Here’s the full breakdown of how it unfolded, why the seizure was deemed illegal, and what it means for crypto regulation moving forward.

How Did a $20K Fraud Investigation Lead to a $700K Crypto Seizure?

The saga began in Waupaca County, Wisconsin, where authorities traced a $20,000 fraud to a Kraken exchange account linked to a legitimate EU brokerage. Despite the firm’s full cooperation, Volusia County detectives froze the account on March 28, 2025, locking up over $450,000 in crypto. By April, the seized assets had ballooned to $700,000 due to market gains. The sheriff’s office then obtained a sealed court order directing Kraken to liquidate 1.19121 BTC and transfer the proceeds to a law enforcement-controlled wallet—a MOVE later ruled as overreach.

Why Did the Brokerage Fight Back?

After days of confusion, Kraken confirmed the freeze was triggered by a transaction flagged by Volusia County Detective Kincaid. The brokerage provided extensive documentation to prove the flagged transaction (0.16196522 BTC, worth $20,000) was unrelated to their business. Shockingly, the seizure order targeted nearly 0.93 BTC—far exceeding the alleged fraud amount. By April 15, the firm was battling a second investigation tied to the same wallet, further complicating the case.

What Legal Mistakes Were Made?

Attorney Leslie Sammis revealed the seizure violated Florida’s Contraband Forfeiture Act on multiple fronts: no filing was made with the clerk’s office, the signing judge lacked jurisdiction, and the executing officer had no authority to act outside Volusia County. Most glaringly, the brokerage received zero formal notice—despite full cooperation. "This wasn’t just sloppy police work; it was a constitutional violation," Sammis told Cryptopolitan.

What Happens Next?

The brokerage’s legal team has filed a public records request under Florida Statute Chapter 119, demanding all documents related to the seizure—including affidavits, asset inventories, and correspondence. Meanwhile, Volusia County officials remain silent on whether policies will change. As crypto regulations evolve, this case sets a precedent: law enforcement can’t treat digital assets like a Wild West free-for-all.

FAQs

How much crypto was seized initially?

Over $450,000 worth of bitcoin was frozen on March 28, 2025, which grew to $700,000 by April due to market appreciation.

What legal grounds did the sheriff’s office use?

None that held up in court—the seizure violated Florida’s Contraband Forfeiture Act procedures and jurisdictional limits.

Did Kraken comply with the seizure order?

Yes, but the exchange admitted failing to notify the account holder until after funds were transferred to police.