Key Takeaways:
A New York court case seeking legal title to 3.8 million Bitcoin could set a dangerous precedent for self-custodied crypto assets if plaintiffs win by default.
Attorney Ian R. Cohen filed a court rebuttal opposing efforts to revive a lawsuit seeking control of 3.8 million Bitcoin worth $238 billion, including wallets linked to Bitcoin creator Satoshi Nakamoto.
Cohen's June 19 filing pushes back against attempts by plaintiffs' attorney David Lin to overturn a court-ordered stay in the New York case, Galaxy Digital research head Alex Thorn said in a June 20 post on X. The lawsuit, brought by anonymous plaintiffs identified as ABC Company, XYZ Company and Noah Doe, targets 39,069 Bitcoin wallet addresses under New York's lost-property statute.
New York Justice Kathy King granted a stay on June 4 after Cohen sought to participate as amicus counsel. If the plaintiffs succeed, they could secure a default judgment against the wallet addresses without meaningful opposition, potentially affecting property rights tied to billions of dollars in Bitcoin. A hearing on the amicus application is scheduled for July 14.
On-chain activity challenges abandonment claims
Cohen argued that dormant wallets do not qualify as abandoned property under New York law. Self-custodied Bitcoin falls outside the jurisdiction of New York courts, he said, and inactivity alone does not establish abandonment. The defendants are not identifiable individuals but 39,069 pseudonymous Bitcoin addresses, making it unlikely that affected parties would appear in court to defend their interests.
The filing also pointed to on-chain evidence that some targeted wallets remain active. The complaint itself identified addresses that recorded outbound transactions, indicating that someone with access to the associated private keys had moved funds. Galaxy researchers found that 52 named addresses collectively moved 34,335 Bitcoin, with 29 of those addresses transferring 12,302 Bitcoin after receiving notice of the lawsuit.
Among the addresses listed in the lawsuit are wallets associated with Satoshi Nakamoto, which Arkham Intelligence data shows hold approximately 1.096 million Bitcoin — about 5.5 percent of the total circulating supply. Also included is the "1Feex" address, which blockchain researchers have linked to Bitcoin stolen during the Mt. Gox breach.
Industry questions court jurisdiction
Criticism of the case has emerged across the crypto industry. Ripple Chief Technology Officer Emeritus David Schwartz questioned how a New York court could assert authority over Bitcoin wallets whose owners are unknown and scattered across a decentralized network. He warned that the legal theory could result in people losing control of their crypto assets.
Binance founder Changpeng Zhao recently suggested that wallets linked to inactive owners, including those believed to belong to Satoshi, could one day be frozen after a transition to quantum-resistant cryptography if holders fail to move funds within a designated migration period. Zhao said any such change would require community consensus.
The case has drawn attention from institutional holders as well. Coinbase holds 970,000 Bitcoin across exchange and custody operations, while Strategy — formerly MicroStrategy — holds 847,000 Bitcoin. The US government holds 328,000 Bitcoin seized during legal proceedings, including recoveries from the Bitfinex hack and Silk Road case.
This article is for informational purposes only and does not constitute investment advice.
