SB 1208: California’s Powerful New Crypto Forfeiture Law (and how victims can use it to get stolen crypto back from scammers).
California has enacted a significant new law aimed at helping victims recover cryptocurrency stolen through fraud. Senate Bill 1208 (SB 1208), signed into law on September 27, 2026, creates a whole new forfeiture procedure allowing California law enforcement and prosecutors to seize qualifying digital assets even when the people behind the fraud are overseas, unidentified, or otherwise beyond the reach of California criminal prosecution. (1)
Under new Penal Code § 186.13, law enforcement can obtain a search warrant for cryptocurrency, wallets, exchange accounts, and other digital assets when there is probable cause to believe the assets are proceeds of specified crimes, were used to facilitate those crimes, or are involved in money laundering. The warrant can specifically identify centralized cryptocurrency exchanges and custodians holding the assets. In appropriate circumstances, law enforcement can also request that an exchange freeze the assets for up to 10 days while it seeks the warrant.
"SB 1208 will put California at the forefront of states’ efforts to combat cryptocurrency fraud and will help facilitate the return of stolen digital assets back to Californians.." (3)
The new procedure is particularly important because a criminal conviction is not required before the forfeiture proceeding can begin. After a seizure, the prosecuting agency generally has 180 days to initiate a special forfeiture proceeding. Potential owners then receive an opportunity to file a verified claim demonstrating that the seized assets belong to them and were obtained legitimately. The court can adjudicate those claims and determine what property, if any, remains subject to forfeiture.
If the cryptocurrency is ultimately forfeited, the statute directs the prosecuting agency to use the assets to compensate victims of the underlying fraud or criminal scheme, generally on a pro rata basis up to each victim’s actual loss. The agency may also establish a claims process for additional victims of the same or related scheme. Any forfeited assets that cannot be distributed to victims within the statutory period are ultimately transferred to the State Restitution Fund for victim services.
For victims, the practical significance is substantial: the fact that cryptocurrency has been moved through multiple wallets, commingled with other funds, or deposited with a centralized exchange does not necessarily end the possibility of recovery. SB 1208 gives California prosecutors a new mechanism to trace, seize, forfeit, and distribute qualifying digital assets—potentially providing a path to recovery even when the scammers themselves remain outside the jurisdiction of U.S. courts.
Under the new law Penal Code Section 186.13(c) allows a California law-enforcement officer or prosecuting agency to send a written freeze request, get a warrant and then move forward with forfeiture within 180 days. In short, the news is that a local DA might be able to help you (if the crime was committed in their jurisdiction) even if the federal government is too busy. Some police departments let you report crypto scams online, and now district attorney's offices will have more power to act on those reports. (2)
We will continue to track the implementation of SB 1208, including the procedures prosecutors and courts develop for tracing cryptocurrency, protecting legitimate owners, and distributing forfeited digital assets to victims.
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