Why Swedish government paid convicted drug dealer $2.3m in bitcoin

A mistake made by the sentencing judge means that a convicted drug dealer is now owed $2.3 million worth of bitcoin from the Swedish government.

The Swedish government has to return about 14 million krona ($A2.3 million) worth of bitcoin to a convicted drug dealer after the value of his illegally earned crypto soared while he sat in prison.

Prosecutor Tove Kullberg explained to Swedish Radio that two years ago, she successfully argued in court that the drug pusher should be stripped of his proceeds, 36 bitcoins, which at the time were only worth around 1.1 million krona (about $A190,000), The Telegraph reported.

But by the time the Swedish Enforcement Authority began auctioning off the crypto, bitcoin had skyrocketed in value – and only three had to be sold to amount to the value that was booked as the dealer’s profit at the time of his arrest.

The government authority now has to return the remaining 33 bitcoins to the jailed dealer, which as of Monday morning are worth about $2.3 million, despite their illicit origins.

“The lesson to be learned from this is to keep the value in bitcoin, that the profit from the crime should be 36 bitcoin, regardless of what value the bitcoin has at the time,” Ms Kullberg reportedly said.

“It is unfortunate in many ways,” she added.

“It has led to consequences I was not able to foresee at the time.”

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The drug dealer’s bitcoin has risen in value by a huge amount since he was sentenced in 2019. Picture: Ozan Kose/AFP

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The prosecutor added that the case was the first in the country’s legal history in which cryptocurrency was seized, so there was no legal precedent to follow.

“I think we should probably invest in an internal education in the [prosecution] authority, as cryptocurrency will be a factor we’ll be dealing with to a much greater extent than we are today,” Ms Kullberg told Swedish Radio.

“The more we increase the level of knowledge within the organisation, the fewer mistakes we will make.”

When he was sentenced, the drug dealer had at the time bitcoin worth around 1.1 million krona (about $A190,000). Picture: iStock

The use of cryptocurrency among criminals has been a chief point of criticism against bitcoin and other major cryptos.

Because crypto transactions, which are recorded on the blockchain, are untraceable by governments and other central authorities like banks, they’re often the preferred payment among ransomware hackers and other criminals.

This article originally appeared in the New York Post and was reproduced here with permission