The Serious Fraud Office (SFO) has used new powers to freeze cryptoassets for the first time in the UK, signalling law enforcement’s growing resolve to tackle financial crimes in digital assets, experts say.
Forensic accountant Hinesh Shah and civil fraud specialist Jennifer Craven, both of Pinsent Masons, were commenting after the SFO froze cryptoassets as part of its investigation into the collapse of Arena TV.
The SFO said in a statement that it had frozen equivalent to £10,865.76 in bitcoin and £289.30 USDC belonging to Arena TV’s Richard Yeowart after proceeds of crime specialists identified the assets as potentially linked to suspected criminal activities.
The assets were frozen under a 'crypto wallet freezing order' (CWFO) – a new power introduced in April 2024 to enable law enforcement agencies to rapidly freeze, seize and recover illicit crypto assets.
The SFO identified in its five-year plan earlier this year that it intended to develop the expertise of specialist staff in relation to “new capabilities in cryptoassets”. However, this is the first time the SFO has elected to pursue a CWFO, which is designed to address the growing challenge of cryptoassets being used to conceal and dissipate the proceeds of fraud.
The SFO’s first application in this case demonstrates its “intent to bring crypto firmly within the scope of its asset recovery toolkit", said Shah. “The SFO’s move to freeze bitcoin is not just about recovering funds – it’s about signalling that crypto is no longer a blind spot for law enforcement,” he added. “As we’ve seen in other cases, including those involving non-fungible tokens (NFTs)-based service of proceedings and crypto-related insolvency disputes, the courts and regulators are increasingly willing to innovate.”
Craven said the use of CWFOs by the SFO marks a “pivotal moment” in the evolution of asset recovery tools. “For civil fraud practitioners, this reinforces the importance of integrating blockchain analytics into asset tracing strategies,” she added. “As courts and regulators become more comfortable with digital assets, we can expect to see a rise in civil claims involving crypto, particularly in fraud, insolvency, and enforcement contexts.”
This development comes as the Office of Financial Sanctions Implementation (OFSI) publishes its latest cryptoassets threat assessment report (34-page / 3.1MB PDF), highlighting the growing risks that digital assets pose to the UK’s financial sanctions regime and their role in enabling sanctions evasion and obscuring illicit financial flows.
The report indicates that since 2022 sanctioned entities have increasingly exploited the borderless, decentralised and pseudonymous nature of many cryptoassets to bypass sanctions. Although OFSI said that large-scale evasion via crypto remains rare at present, the risks are only increasing.
Cryptoassets have increasingly been identified as a blind spot in sanctions against hostile regimes. Since January 2022, just over 7% of all suspected breach reports submitted to OFSI involved cryptoasset firms. Russia accounts for over 90% of these cryptoasset-related suspected breach reports, with Iran making up the remaining 10%.
OFSI also identified the threat posed by the growing use of privacy coins – including Monero and Zcash – mixers and decentralised exchanges (DEXs). Such tools can obscure the origin and destination of funds, as well as complicating enforcement and due diligence, particularly when used in combination.
Shah said the report underscores the complex forensic challenge posed by cryptoassets. “While blockchain offers transparency in theory, in practice, the use of privacy coins, mixers and cross-chain bridges can create a fog of financial activity that’s difficult to penetrate,” he said. “For investigators, the key lies in combining traditional asset-tracing techniques with advanced blockchain analytics to follow the money across jurisdictions and protocols. This report is a timely reminder that crypto is no longer niche – it’s a mainstream risk vector in fraud and sanctions evasion.”
Other emerging threats include the increasing tokenisation of assets. As real-world assets from property to commodities are increasingly tokenised, this creates a growing risk of sanctions evasion through digital proxies. Decentralised finance platforms and autonomous organisations also present unique challenges as they often lack clear ownership or control structures. Cross-chain bridges are also being used by criminals to move assets between blockchains, which further complicates traceability and enforcement.
Although the UK has taken considerable steps already this year towards establishing its own regime to regulate cryptoassets, OFSI said that some jurisdictions still lack robust crypto regulation or enforcement, which has created gaps or ‘safe havens’ for illicit actors. Consequently, sanctioned individuals may exploit these gaps to bypass UK and international controls.
The report also points to a lack of reporting and controls in the UK, since many cryptoasset service providers (CASPs) are not yet fully integrated into the UK’s sanctions compliance ecosystem. OFSI highlighted inconsistent reporting, limited screening capabilities, and a lack of awareness among smaller firms.
Stacy Keen, a sanctions expert at Pinsent Masons, said the report also signals a distinctive shift in OFSI’s regulatory approach to cryptoassets. “OFSI is not only acknowledging the growing role of crypto in sanctions evasion, but is also setting expectations for compliance,” she said. “Cryptoasset service providers – especially those operating in the UK or serving UK clients – should treat this as a call to action. Screening, reporting and governance standards must now match those of traditional financial institutions. The message is clear: ignorance of sanctions obligations in the crypto space is no longer defensible."
In light of the number of emerging threats facing the cryptoassets industry, OFSI said it would provide improved guidance for CASPs including expectations around screening, reporting, and risk assessment. The agency is also working with crypto firms, financial institutions and international partners to raise awareness and improve compliance.
The financial stakes are high. Earlier this month the value of the global cryptocurrency market reached $4tn for the first time after US Congress passed the so-called Genius Act, which regulates tokens called stablecoins that are linked to sovereign currencies, such as USDC, which is pegged to the US dollar.
Contact an adviser
