US Court Rejects $345 Million Bitcoin Claim Over Hard Drive FBI Wiped Clean
A US appeals court has rejected a $345 million claim by convicted identity thief Michael Prime, who accused the FBI of seizing and erasing a hard drive containing the key to 3,400 Bitcoin.
A three-judge panel at the Eleventh Circuit Court of Appeals found that Prime can’t sue the government over the loss because he waited too long and had previously said he owned a much smaller amount of crypto.
“For years, Prime denied that he had much bitcoin at all,” the Judges wrote. “And bitcoin was not on the list when he sought to recover missing assets after his release from prison. Only later did Prime claim to be a bitcoin tycoon.”
The case highlights a recurring risk in crypto ownership: When access keys are destroyed or lost, the assets are gone forever.
FBI Had Wiped The Hard Drive As Part Of Its Standard Procedures
Prime was released from Prison in July 2022, and had asked the court to return the hard drive that contained the Bitcoin. But the FBI had wiped the device as part of its standard procedures. Prime argued that this was illegal, according to the judges.
According to the panel, Prime claimed to own “approximately 3,500 Bitcoin” before he struck a plea deal in November 2019 to admit to device fraud, identity theft, and illegally possessing a firearm.
But he then “changed his tune” and no longer claimed to own a significant amount of crypto, the judges wrote. According to a February 2020 disclosure, Prime said that he owned “only $200 to $1,500 in bitcoin.” He told a probation office that the holdings were “his only remaining asset.”
The appeals court said that Prime tried to “explain away” the lower figure by claiming that he was reporting the “market value of a single bitcoin at that time was between $200 and $1,500.”
The judges said they didn’t ”buy it,” adding that Prime’s valuation was “preposterous” given the leading crypto was trading at over $10,000 at times in February 2020.
CoinMarketCap corroborates the judges’ argument.
BTC price (Source: CoinMarketCap)
Millions Of Bitcoin Likely Lost Forever
A cryptographic key is the only way to access Bitcoin stored on a physical device. If the key is lost, users risk losing access to the crypto forever.
In fact, around 1.46 million BTC, or nearly 7% of Bitcoin’s total 21 million supply, is likely lost forever, according to data from Glassnode.
But estimates on the number differ and Chainalysis reported in 2018 that the amount of Bitcoin permanently lost could be as high as 3.7 million coins, or about 17.5% of the crypto’s total supply.
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