- A New York judge has paused a lawsuit seeking ownership of 39,069 dormant Bitcoin wallets holding an estimated 3.8 million BTC.
- The plaintiffs are attempting to use New York’s lost-property laws to claim inactive wallets, a legal theory not previously applied to blockchain assets.
- Attorney Ian R. Cohen argues the law was designed for tangible property and that existing virtual currency legislation already addresses dormant crypto holdings.
A lawsuit attempting to secure ownership of 39,069 dormant Bitcoin wallets has been paused by a New York Supreme Court judge, delaying any effort to obtain a default judgment until at least a 14 July hearing. The addresses are estimated to contain roughly 3.8 million BTC, valued at around US$234 billion (AU$325.26 billion).
The action was filed by anonymous plaintiffs who argue that New York’s lost-and-found statute can be used to transfer ownership of long-inactive wallets to a finder when the original owner fails to reclaim them. The approach represents a novel legal argument, as the law has not previously been used to claim blockchain-based assets.
Justice Kathy J. King issued the stay on 4 June, suspending further proceedings relating to the plaintiffs’ request for a declaration of ownership. The court will hear arguments in July regarding a motion filed by attorney Ian R. Cohen to participate as amicus curiae.
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Cohen’s proposed brief challenges the foundation of the lawsuit, arguing that New York’s lost-property framework assumes possession of a tangible item and cannot be extended to Bitcoin addresses recorded on a public blockchain. He also contends that blockchain addresses were never hidden from public view and therefore cannot be considered lost property.
The brief additionally cites a 2022 amendment to New York’s Abandoned Property Law that established a process for handling dormant virtual currency through the State Comptroller. Cohen argues this legislative framework, rather than the lost-and-found statute, addresses dormant cryptocurrency assets.
The wallets named in the lawsuit include the “1Feex” address linked to the 2011 Mt. Gox hack, along with addresses that Galaxy Research says correspond to early Bitcoin-era “Patoshi” patterns associated with Bitcoin’s creator.
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