A New York court has ruled that Bitcoin addresses are not "abandoned property," delivering a powerful blow to the defense in a $231 billion lawsuit.
The case involving 39,069 inactive Bitcoin addresses, valued at approximately 3.7 million BTC (about $231 billion), has taken an unexpected turn. The pseudonymous defendant John Doe 33 has filed a motion to dismiss the lawsuit filed on March 11 on behalf of Noah Doe and two Wyoming LLCs. The plaintiffs claimed these coins were "abandoned property" and sought to transfer ownership rights. However, the defense has raised an argument that challenges the very essence of the claims.
John Doe 33 stated that Bitcoin addresses are not legal entities that can be named as defendants. According to his version, the plaintiffs essentially handed over USB drives containing their own records of public blockchain data to the police, which does not create a basis for recognizing the addresses as "found property." He also noted that his pseudonym is not linked to the 33rd address on the plaintiffs' list but is used solely to protect against the risk of physical persecution by owners of large crypto assets.
Why This Changes Everything
Galaxy's Head of Research Alex Thorn emphasized that the emergence of a real defendant who contests the lawsuit and has the right to participate in the proceedings fundamentally changes the dynamics of the case. "He is pointing precisely to the jurisdictional and legislative flaws that are hardest for the plaintiffs to overcome," Thorn wrote. Until now, the case was proceeding against a list of addresses whose owners did not appear in court, giving the plaintiffs the opportunity to obtain a ruling without a fully adversarial position from the other side.
Notably, John Doe 33 is associated with a wallet holding 5,000 BTC that has not moved for over 12 years. At the current exchange rate, this balance is estimated at approximately $300 million. This makes him not just a formal defendant but a real player with significant financial interests.
Inactivity Does Not Equal Abandonment of Property
Bitcoin attorney Ian Cohen, who filed an amicus curiae brief in court, urged the dismissal of the lawsuit, arguing that the law on found property applies to physical objects, not to the result of scanning a public blockchain. "Simple inactivity, no matter how long, is not an abandonment of property," Cohen stated. He also reminded that New York State's abandoned property law, amended in 2022 for virtual currencies, provides for the transfer of such assets to the state comptroller, not to private individuals.
According to Bitbo data, about 3.5 million BTC have not moved for over 10 years, and another 6.6 million BTC for over five years. These coins are either lost or investors are deliberately holding private keys in cold storage. In the event of the owner's death, access to them may depend on inheritance, but this does not make them "abandoned."
Expert Opinion: This lawsuit initially appeared to be an attempt to exploit a legal loophole to seize assets that no one was contesting. However, the emergence of a real defendant and a legally sound defense position show that courts are not ready to recognize Bitcoin addresses as "unclaimed property" solely based on prolonged inactivity. If the motion to dismiss is granted, it will create an important precedent protecting the rights of crypto asset holders from such attempted hostile takeovers.