A New York lawsuit filed by Noah Doe and two Wyoming-based LLCs, ABC Company and XYZ Company, seeks a court order declaring ownership of 39,069 dormant Bitcoin addresses, raising important questions about the legal treatment of inactive Bitcoin under property laws.
Filed on May 1, the suit claims that the coins tied to the listed addresses represent legally abandoned property they found and reported to the New York Police Department and claimed under New York lost-property law.
The plaintiffs claim that the dormant Bitcoin wallets were legally “abandoned” property that they found, including wallets belonging to early Bitcoin miners and addresses attributed to Bitcoin creator Satoshi Nakamoto, among other lost coins and unidentified entities. They claim that these constitute seizable property, akin to traditional bank accounts.
The lawsuit raises important questions about the legal treatment of long-dormant Bitcoin wallets, including Satoshi-era tokens that have been inactive for over a decade. While the legal basis of the lawsuit is questionable, it is unclear how the plaintiff could recover the lost Bitcoin without possessing the private keys to access the wallets.
However, even if the court ruled in favor of the plaintiff, it would only be a symbolic move that is not technically enforceable, as the Bitcoin network has no mechanism to “reassign funds without a private key,” Noveleader, lead research analyst at investment research firm Castle Labs, told Cointelegraph, adding:
“The one narrow exception would be if any of these coins are moved to a regulated custodian or exchange, at which point a court could compel that intermediary to act.”
The research analyst argued that a significant portion of these coins may belong to deceased holders, those who lost their keys or simply to long-term holders who haven’t transacted, meaning that none of these instances constitute legal abandonment.
ABC Company, XYZ Company, Noah Doe, lawsuit against John Does holding 39,069 BTC. Source: ilawconotices.com
Lawsuit seeks ownership of Satoshi’s tokens, Mt. Gox hacker’s BTC stash
The 901-page lawsuit lists 39,069 total Bitcoin wallet addresses, including wallet address “12c6D” associated with Satoshi Nakamoto and address “1Feex” linked to the Mt. Gox exchange hacker.
ABC Company, XYZ Company, Noah Doe, lawsuit against John Does holding 39,069 BTC, Bitcoin wallets. Source: ilawconotices.com
The listed addresses hold an estimated 3.7 million BTC, valued at about $285 billion, according to Sani, the founder of Bitcoin onchain analytics platform Timechain Index.
The founder also noted that most of the old Satoshi-era tokens are currently sitting in Pay-to-Public-Key (P2PK) output formats, while the plaintiffs only sent legal notices to the corresponding hashed public key under Pay-to-Public-Key-Hash (P2PKH) formats, which often hold no value.
This could undermine the claim that proper notice of abandonment was given to the holder, since plaintiffs sent the legal notices to the empty P2PKH addresses, while the actual BTC balance sits in unnotified P2PK scripts.
Castle Labs’ lead research analyst agreed, adding that the messaging attempt was “structurally defective” because it was sent to the address formats no longer used by the targeted wallets. Sending a small transaction via the OP_RETURN function would be “similarly ineffective” as it only works with active recipients monitoring their wallets.
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The over 39,000 wallets named in the lawsuit hold Bitcoin that are considered dormant, or lost, meaning that they haven’t been circulating onchain for multiple years.
The supply of Bitcoin dormant for the past five and 10 years. Source: Bitbo
There are currently 3.5 million Bitcoin, worth about $271 billion, that have been dormant for the past 10 years and another 6.6 million coins, worth around $577 billion, that have been dormant for over five years, Bitbo data shows.Magazine: The legal battle over who can claim DeFi’s stolen millions
