In brief
- A loophole in German law has enabled a man to escape criminal charges for the alleged theft of $2.9 million (€2.5 million) in cryptocurrency.
- Under the German Criminal Code, theft is defined as the “taking of another’s movable property,” and since cryptocurrencies don’t have a physical form it does not recognize them as “things.”
- The accused could still face civil action—and experts predicted that legislative amendments to close the loophole are “highly likely.”
A man on trial in Germany has escaped criminal charges after allegedly stealing $2.9 million (€2.5 million) in cryptocurrency through an unauthorized transfer, thanks to a series of unusual legal loopholes.
The case, heard by the Braunschweig Higher Regional Court (OLG), involved the alleged theft of 25 million unspecified tokens.
According to court documents, the defendant helped the victim set up a crypto wallet for a project and, in the process, reportedly gained access to the 24-word seed phrase. He then allegedly transferred the tokens from the victim’s wallets into two other wallets outside the victim’s control.
But under Section 242 of the German Criminal Code (StGB), theft is defined as the “taking of another’s movable property.” Since cryptocurrencies like Bitcoin and Ethereum lack physical form, German law does not recognize them as “things”—meaning the traditional theft charge didn’t apply, according to German newspaper Heise.
Other potential charges also failed. Judges ruled that “computer fraud” did not apply because the blockchain transaction could not be clearly tied to unauthorized data manipulation with the intent to gain.
“A declaration of genuine authorization for the transaction cannot be assumed in decentralized blockchain networks,” the court found. They also rejected the charge of falsifying evidentiary data, citing “a lack of identifiability of the issuer.”
The judges also found that case “data alteration” did not apply. Though they acknowledged that data had been altered, they found that since the transaction was carried out on the blockchain the “data modification is carried out by the network operators and thus by the persons authorized to dispose of the data.”
While the accused may have avoided criminal prosecution, he could still face civil action—a likely scenario given the sums involved.
What does this mean for German crypto?
A lawyer from WINHELLER, a German law firm specializing in crypto assets, told Decrypt that “legislative amendments are highly likely as the ruling creates a massive protection gap where millions in crypto can be stolen without criminal consequences.”
The expert predicts this will “force urgent reforms” to expand theft laws for digital assets and create “specific crypto-related criminal provisions.”
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