fraud finance
How liable is a seller that was unknowingly paid using stolen funds?
<p>I sold some of my Bitcoins on LocalBitcoins UK to an account that appears now to have paid using stolen funds from a hacked bank account. I checked that the buyer was ID-verified with LocalBitcoins and released the Bitcoins to the buyer. I find now that my bank account is frozen. I am awaiting further information from the bank but want to understand the legal position here.</p>

<p>My understanding is that bank insurance is for cases of shortcomings in bank account security, and that it is appropriate for the owner of the hacked bank account to be reimbursed by their bank's insurance. The bank can then pursue the person who stole the funds. I cannot see how a seller can be expected to distinguish legitimate from stolen money because money is fungible. Why should I be at a loss for deficiencies in a bank's security?</p>

<p>I would welcome guidance and thoughts on this. If a thief uses stolen money to purchase items in various shops, for example, can an institution demand repayment from those various shops? How about if the owner of one of those shops spends the money elsewhere? Can an institution demand that money also? Where does the buck stop?</p>

<p>If the stolen funds can be reliably tracked and identified, as physical cash generally cannot be, then it can be seized.</p>
<p>It is classic that after a bank robbery, if the serial numbers of bills stolen are known, an alert can be put out for them, and those specific bills can be seized when found.</p>
<p>]The case in the question seems analogous. Specific stolen funds can be traced to the purchaser of the bitcoins, and those specific funds were transferred to the seller. If that can indeed be proved, then the seller has no right to those funds, even though the seller had no knowledge that the funds were stolen.</p>
