5
tangible, external device (“hardware wallet”), downloaded on a PC or laptop (“desktop wallet”),
with an Internet-based cloud storage provider (“online wallet”), as a mobile application on a
smartphone or tablet (“mobile wallet”), printed public and private keys (“paper wallet”), and as
an online account associated with a cryptocurrency exchange. Because these desktop, mobile,
and online wallets are electronic in nature, they are located on mobile devices (e.g., smart phones
or tablets) or at websites that users can access via a computer, smart phone, or any device that
can search the Internet. Moreover, hardware wallets are located on some type of external or
removable media device, such as a USB thumb drive or other commercially available device
designed to store cryptocurrency (e.g. Trezor, KeepKey, or Nano Ledger). In addition, paper
wallets contain an address and a QR code
3
with the public and private key embedded in the code.
Paper wallet keys are not stored digitally. Wallets can also be backed up into, for example, paper
printouts, USB drives, or CDs, and accessed through a “recovery seed” (random words strung
together in a phrase) or a complex password. Additional security safeguards for cryptocurrency
wallets can include two-factor authorization (such as a password and a phrase). I also know that
individuals possessing cryptocurrencies often have safeguards in place to ensure that their
cryptocurrencies become further secured in the event that their assets become potentially
vulnerable to seizure and/or unauthorized transfer. The Trezor device offers an advanced
passphrase option that incorporates a “25
th
seed word” that must be enabled to access potentially
obscured digital currency assets.
k. Some companies offer cryptocurrency wallet services which allow users to
download a digital wallet application onto their smart phone or other digital device. A user
typically accesses the wallet application by inputting a user-generated PIN code or password.
Users can store, receive, and transfer cryptocurrencies via the application; however, many of
these companies do not store or otherwise have access to their users’ funds or the private keys
that are necessary to access users’ wallet applications. Rather, the private keys are stored on the
device on which the wallet application is installed (or any digital or physical backup private key
that the user creates). As a result, these companies generally cannot assist in seizing or otherwise
restraining their users’ cryptocurrency. Nevertheless, law enforcement could seize
cryptocurrency from the user’s wallet directly, such as by accessing the user’s smart phone,
accessing the wallet application, and transferring the cryptocurrency therein to a law
3
A QR code is a matrix barcode that is a machine-readable optical label.
Case 2:20-mj-00140-CKD Document 1 Filed 09/14/20 Page 6 of 22