A UK police force has become the first in the country to seize and convert cryptocurrency from a criminal who was using it to hide illegal assets.

Surrey Police arrested 31-year-old Seregjs Teresko on suspicion of money laundering and drug offences in April 2017 after a cannabis factory was found at his home alongside a number of fake identification cards and large sums of cash.

Luxury goods including jewellery and Rolex watches, large sums of money, gold bars and expensive cars were also found at Teresko's properties in Virginia Water and Cobham, both in Surrey.

Surrey Police were also able to seize 295 Bitcoins using powers under the Proceeds of Crime Act and the CPS Proceeds of Crime team then successfully applied for a restraint order from the courts.

They were later converted to almost £1.25 million through an international exchange.

While other forces have seized Bitcoin before, Surrey Police is the UK's first law enforcement agency to then convert into sterling and retain the money following a Proceeds of Crime Act hearing.

"It appears Teresko was a member of an organised crime group and bitcoin was one of the methods he chose to launder criminal assets," said detective inspector Matthew Durkin, of the Economic Crime Unit.

"I hope this sends a clear message to criminals using bitcoin to fund illegal activities; it's not an anonymous as you think, we are able to trace you and we will prosecute.

"This is a ground-breaking, innovative achievement and we are very pleased to be the first UK police force to have achieved this."

In October 2017 Teresko pleaded guilty to money laundering, cultivation of cannabis and the possession/control of articles for use in fraud at Kingston Crown Court.

He was sentenced to nine years and three months imprisonment.

Senior NCA officer Phil Larratt, who assisted Surrey Police with the investigation, added: "Although the vast majority of cryptocurrency use is legitimate, we know that the technology is used by criminals to launder significant amounts of criminal property. 

"Notoriously cryptocurrencies are the payment method of choice on the dark web but we are also starting to see more traditional crime groups use the Bitcoin network to store and transfer value. 

"As this investigation demonstrates, these assets are not beyond the reach of UK law enforcement and we will work with local, regional and international partners, academia and the private sector to understand and counter the threat posed by the criminal uptake of cryptocurrencies."

How did Surrey Police access the Bitcoin wallet? 

With the help of the South East Regional Organised Crime Unit (SEROCU), Surrey Police made a successful application at Magistrates Court under section 47 of POCA to seize the contents of the wallet. 

After discovering that the account contained 295 Bitcoins, they were moved into a wallet controlled exclusively by Surrey Police. This was the first time that this specific POCA legislation was used in the UK to seize cryptocurrency.

An application by the Crown Prosecution Service was then made to grant Surrey Police legal permission to control and convert the Bitcoins.