Recovery of Misappropriated Crypto-Assets: Feasibility, Methods, and Remedies

Crypto-assets have a unique characteristic: their transfers are both irreversible and fully traceable. Since every transaction is publicly recorded on a blockchain, it is, theoretically, possible to trace the path of stolen funds. This traceability forms the starting point for any recovery strategy.

However, this transparency is limited by the pseudonymous nature of addresses. The blockchain allows for the observation of flows, but not for the direct identification of account holders. Recovery therefore requires overcoming a decisive hurdle: linking these flows to an identifiable and legally accountable person or entity.

In practice, this condition is met when funds pass through regulated entities, such as centralized exchange platforms or stablecoin issuers (second-generation crypto-assets designed to be more stable since they are backed by or linked to a reserve of assets (4). These intermediaries serve as points of contact between the decentralized ecosystem and the traditional legal system. Under certain circumstances, they enable the freezing of funds, the identification of the holder, or cooperation with authorities.

Thus, recovery appears to be a contingent possibility, predicated upon the existence of these anchor points. In the absence of such points, when funds remain constrained to fully decentralized or anonymized environments, the prospects for recovery become extremely limited.

While the recovery of crypto-assets is often viewed through a criminal law lens, in practice it is increasingly approached as a matter of civil asset recovery, based on the search for, identification of, and preservation of misappropriated assets.

This approach is based primarily on the classification of crypto-assets as property subject to appropriation. Order No. 2024-936 of October 15, 2024, on crypto-asset markets defines them as “negotiable intangible assets,” paving the way for their treatment under civil law mechanisms and enforcement procedures. This classification makes it possible to consider not only their restitution but also, where appropriate, compensation for damages through equivalent value.

From this perspective, the main challenge lies in identifying the holders of the assets or intermediaries who may have control over them. In this regard, Article 145 of the French Code of Civil Procedure is a particularly effective tool. It allows, prior to any trial, for the issuance of investigative measures intended to preserve or establish evidence of facts upon which the resolution of the dispute may depend. In the context of crypto-assets, this mechanism is used to obtain information from exchange platforms, including user identification data or transaction histories.

Recent developments in European Union law further strengthen these mechanisms through tax transparency. In this regard, the entry into force of the DAC8 Directive on January 1st, 2026, requires crypto-asset service providers to automatically collect and report detailed information on transactions and holdings of digital assets to tax authorities.

While this instrument primarily pursues a tax objective, its implications for litigation are significant. It facilitates the identification of account holders and the tracing of financial flows by reducing the information asymmetry characteristic of crypto-assets. DAC8 thus indirectly enhances the effectiveness of seizure, freezing, and confiscation measures by strengthening the points of contact between the crypto ecosystem and public authorities.

Beyond the evidentiary phase, civil law also provides tools to preserve the assets in question. Precautionary measures may be sought to prevent the dissipation of funds, particularly when these are held by an identifiable intermediary. These measures form part of an asset-freezing framework akin to that applied in the banking sector.

Furthermore, proceedings on the merits may be brought on various grounds, such as tortious liability in cases of fraud, or unjust enrichment when assets have been transferred without legitimate cause. In certain circumstances, actions to recover property may also be considered, provided that a sufficient link can be established between the claimed assets and those initially misappropriated.

Finally, the international nature of litigation frequently requires the use of cross-border civil cooperation mechanisms. European instruments, particularly those concerning the recognition and enforcement of judicial decisions, facilitate the implementation of measures across multiple Member States, which is essential in an environment where the flow of crypto-assets knows no borders.

Thus, the recovery of crypto-assets is not solely a matter of law enforcement but is increasingly part of a structured asset management approach, utilizing traditional civil law tools adapted to the specific characteristics of digital assets. Recent cases illustrate the scope and limitations of this approach. In the Bitfinex case, the seizure of tens of thousands of bitcoins several years after the events demonstrates that recovery remains possible over the long term, provided that usable evidence remains and that the flows can be linked to identifiable actors. Conversely, the Horizon Bridge attack highlights the inherent difficulties of these mechanisms: despite extensive tracing of the funds, their dispersion and the use of obfuscation techniques have significantly limited the possibilities for effective recovery. These examples underscore that traceability, while a necessary condition, cannot by itself guarantee the return of assets.
Therefore, the victim’s response must be immediate and systematic. Securing access is a priority, followed by the rigorous collection of transactional evidence. Prompt notification of the platforms may lead to the freezing of funds, subject to coordination with the authorities. This process may be accompanied by the filing of a complaint in certain cases.

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