Swedish authorities have to pay three convicted drug dealers nearly $1.5 million after the value of their Bitcoin appreciated tenfold during imprisonment.
According to Swedish national broadcaster Sveriges Radio, law enforcement seized 36 Bitcoin from the three men, who were convicted of selling large quantities of illegal drugs online in April 2019.
That’s when things took a wrong turn—at least for the police. During the case, prosecutor Tove Kullberg converted the amount of money the dealers had to turn over to the state from Bitcoin to Swedish kroner. At the time, this was 1.3 million SEK (~$150,000) or the value of the seized Bitcoins at the time.
If the Swedish state had immediately sold off the Bitcoin, this might not have been a problem. But it didn’t; instead, it auctioned off the Bitcoin two years later after they’d appreciated to a value of more than 13 million SEK (~$1.5 million).
Because the authorities fined the criminals in Swedish kroner—rather than just leaving it as Bitcoin—it only took three of the 36 Bitcoins to cover the cost. Now, the government has to pay back the remaining 33 Bitcoins to the drug dealers.
The lapse in judgement has left Swedish authorities red-faced. The country has a zero-tolerance drug policy that stands in stark contrast to some of its Northern European neighbors. It also comes on the heels of a similar case where authorities were forced to pay a convicted underage rapist nearly $100,000 dollars—more than his victims received—in damages after he was accidentally given an adult-length sentence.
In a phone call with Motherboard, the Swedish Prosecution Authority confirmed the mistake, but did not provide further comment.
Kullberg also declined to comment. In an interview with Sveriges Radio, however, she acknowledged that her knowledge of Bitcoin was lacking at the time and that Bitcoin seizures were uncharted territory in the Swedish legal system.
“This led to consequences that I see now but did not foresee at the time,” Kullberg said. “It’s unfortunate that it happened this way.”
“The lesson to be learned here is to keep the value in Bitcoin,” she continued, “that the profit from the crime is 36 Bitcoin, regardless of the Bitcoin’s value at the time.”
In the wake of the highly publicized case, Swedish authorities announced last week that the Public Prosecution Authority will be unveiling new legal guidance on how to deal with cryptocurrency in the fall.