A lawsuit in New York involving approximately 3.8 million bitcoins has seen a new development. Attorney Ian R. Cohen has filed a counterclaim with the court, opposing the plaintiff's resumption of the case. The central issue is whether long-untouched, self-custodied bitcoins can be considered "abandoned property" under New York State law, allowing for a court order to transfer control.
The lawsuit targets 39,069 wallets.
This case involves 39,069 Bitcoin wallet addresses, estimated to be worth approximately $238 billion according to the article. These include wallets believed to be linked to Satoshi Nakamoto, as well as the 1Feex address previously linked to the investigation into the stolen Bitcoin from Mt. Gox.
The plaintiffs, who filed the lawsuit anonymously under the names ABC Company, XYZ Company, and Noah Doe, argue that these long-dormant wallets constitute abandoned assets and that the court should allow them to take control of the related Bitcoin.
Lawyers oppose lifting the suspension order
In a filing on June 19, Cohen stated that New York State laws regarding lost property do not apply to self-custodied Bitcoin, and that the lack of transactions at an address over a long period is insufficient to prove that the assets have been abandoned. He also argued that the private key itself is not under the jurisdiction of New York courts.
He also stated that if the court lifts the previous stay order, the plaintiffs could potentially pursue default judgments against these wallet addresses in the absence of substantial adversarial proceedings. This would affect the property rights associated with billions of dollars worth of Bitcoin.
On-chain transfers weaken the plaintiff's claims
The latest documents also indicate that some of the addresses listed in the indictment had seen outgoing transactions, meaning that someone still possesses the relevant private keys and is able to move funds. If the addresses can still initiate transfers, the claim that "the assets have been abandoned" becomes untenable.
In an X post published on June 20, Alex Thorn, research director at Galaxy Digital, stated that 52 addresses identified by Galaxy transferred a total of 34,335 BTC, with 29 of those addresses transferring an additional 12,302 BTC after receiving notice of the lawsuit.
This case has also raised questions within the industry regarding jurisdiction. David Schwartz, former CTO of Ripple, previously stated that how a New York court could assert authority over a group of Bitcoin wallets with unknown owners distributed across a decentralized network was one of the weakest points of the case.
