- A new OIG audit shows no standard practices for managing seized digital assets.
- The OIG makes recommendations regarding the best way to track seized cryptos.
The Office of the Inspector General (OIG) of the US Justice Department recently completed an audit of all seized cryptos by the US Marshals Service (USMS). The OIG discovered that it has become necessary for the federal agency to change its policies regarding crypto seizures and management completely.
Highlights from the OIG audit
The OIG audit revealed that the USMS makes adequate provisions for storing seized crypto funds. However, the USM doesn’t have a standard regulatory procedure for tracking these seized assets. The OIG discovered that the USMS resorted to using spreadsheets to track these funds instead of the available consolidated asset tracking system (CATS).
The USMS couldn’t use the CATS tool because the tool isn’t upgraded for digital asset management. The Justice Department started this audit because the USMS has been managing seized crypto funds on its behalf since June 2021.
As of June 2021, the USMS managed nearly 200 DOJ cryptocurrency seizures. We looked at the USMS’s management of seized cryptocurrency, and found that the USMS faced challenges in managing and tracking cryptocurrency.
— DOJ Inspector General (@JusticeOIG) June 14, 2022
The OIG audit revealed no proper practices for crypto-asset documentation and management. Part of the audit report reads;
the present USMS management policies regarding seized digital assets are absent or inadequate in some cases. It is inadequate because there are contradictory policies on these digital asset storage, valuation, and disposals.
The OIG’s recommendations
Following the audit result, the OIG made seven suggestions for the USMS. One, the USMS must start using a property management tool. This tool keeps a record of edit history. Thus, no one can edit the inventory records for fraudulent purposes.
The OIG further suggested an overhaul of the current ways the USMS tracks crypto seizures. Part of this suggestion involves upgrading the CATS tool to ensure that the USMS tracks and handles the seized cryptos properly. The introduction of a good number of decimal places was another important recommendation in the OIG audit report.
This will provide fractional accuracy. It will also ensure that the USMS can implement the right policies for blockchain forks. In addition, it would help the USMS to exert physical control over the seized assets, especially important USMS wallet keys.
The report states that the USMS agreed to implement all the recommendations in the report. Then, the USMS will close the report once it has implemented all these recommendations. The weekly Coinshares’ report for Digital Assets’ Flows showed that investors had sold nearly $101.5M worth of digital assets.
The possibility of a hawkish monetary policy was a huge factor in these selloffs. The Fed’s decision has been a huge factor in pushing bitcoin into a crypto winter. Investors predict that the Fed will increase rates more than previously predicted.
The Coinshares report also revealed that total Assets under Management for Ether funds are $8.7B as of last Friday, June 10, 2022. This amount represents a significant reduction as it was $23B last November.