Appeals Court Rejects Prisoner’s Lawsuit Over Alleged $354M Bitcoin Loss

A federal appeals court docket has rejected a Florida man’s try and get well greater than $354 million in Bitcoin that he claimed was misplaced when authorities destroyed a tough drive seized throughout his 2019 arrest for counterfeiting and identification theft.

In a ruling launched Tuesday, the Eleventh Circuit affirmed a decrease court docket’s resolution denying Michael Prime’s request for property restitution. He mentioned he waited too lengthy to file his declare and the delay prevented the federal government from returning the destroyed exhausting drive.

“For years, Prime denied that he had a lot Bitcoin in any respect. And Bitcoin was not on the record when he tried to get well lacking belongings after his launch from jail,” circuit judges wrote within the paper. enchantment.

It was “solely later” that Prime claimed to be “a Bitcoin tycoon,” they added.

The court docket mentioned Prime repeatedly informed investigators, probation officers and a choose that he owned little or no crypto, contradicting later claims that he owned “practically 3,443 bitcoin.”

Federal brokers, counting on his early statements, ended their seek for Bitcoin and later destroyed the seized gadgets, together with the orange exhausting drive on the heart of the case.

Prime, who was sentenced to greater than 5 years in jail in 2020 for entry machine fraud, aggravated identification theft and unlawful firearms possession, claimed after his launch that the exhausting drive contained the cryptographic keys to his misplaced Bitcoin.

He filed a movement beneath Rule 41(g)which permits suspects to demand the return of seized property after a case ends. A district court docket denied this in 2024, ruling that the gadgets had been “correctly destroyed” and that Prime’s years-long denial made his declare premature.

The Eleventh Circuit agreed with its ruling, saying that Prime’s “inexcusable delay” had “harmed the federal government” and that compensation could be inequitable “even when Bitcoin existed.”

Misplaced cash

Bitcoin itself shouldn’t be saved on a tough drive; it exists on a blockchain, a ledger shared by hundreds of computer systems. What could be saved on a tough drive are the personal keys or pockets information that enable somebody to entry and spend Bitcoin, linked to his or her addresses.

With out these keys, Bitcoin is presumably nonetheless accessible, however successfully inaccessible, as possession can’t be confirmed or transferred.

“Misplaced cash simply make everybody’s cash price just a little extra. Consider it as a donation to everybody,” says Satoshi Nakamoto, the pseudonymous creator of Bitcoin, wrote in 2010.

A 2025 report from Bitcoin-only monetary establishment River Monetary estimates that between 2.3 million and 4 million BTC, representing between 11% and 18% of the full provide, shall be completely misplaced.

About 3.8 million BTC are linked to wallets which have been inactive for greater than a decade, with about 19.8 million cash being mined out of a tough restrict of 21 million. River Monetary estimates that the efficient circulating provide is probably going between 15.8 million and 17.5 million BTC.