- A federal appeals court rejected a bid to recover over $354 million in Bitcoin claimed lost after destruction of a seized hard drive.
- The court ruled the claimant’s delay and conflicting statements prevented his claim under the doctrine of laches.
- The defendant initially denied owning significant cryptocurrency before later claiming to hold 3,443 Bitcoin.
- Law enforcement destroyed the hard drive after finding no evidence of Bitcoin during the 2019 search.
- Bitcoin is stored on a blockchain; lost private keys make the coins inaccessible but do not erase them from the network.
A federal appeals court upheld a decision denying a Florida man’s request to recover more than $354 million worth of Bitcoin after authorities destroyed a hard drive seized during his 2019 arrest. The hard drive allegedly contained access keys to the digital assets.
The Eleventh Circuit agreed with a lower court’s ruling that the man, Michael Prime, waited too long to claim the property. The delay made it impossible for the government to return the destroyed device. Prime was arrested for counterfeiting and identity theft and sentenced in 2020 to over five years in prison.
Court documents showed Prime originally told officials he owned little to no cryptocurrency, including during interactions with investigators and probation officers. Later, he claimed ownership of nearly 3,443 Bitcoin. Using these earlier statements, federal agents stopped searching for Bitcoin on the seized devices and destroyed them.
Prime then filed a motion under Rule 41(g), which allows defendants to seek the return of seized property after a case ends. The motion was rejected for being filed too late, with the court stating the destruction was justified and Prime’s inconsistent statements barred his claim under the legal doctrine of laches.
Bitcoin itself is not stored on physical media but exists on a blockchain, a public ledger maintained by many computers. What a person needs to access Bitcoin are private keys or wallet files, which may be stored on hard drives. Losing these keys means the Bitcoin cannot be moved or spent, though it still exists on the blockchain.
A 2025 report from River Financial estimates that between 2.3 million and 4 million Bitcoins are permanently lost, representing 11% to 18% of total supply. About 3.8 million coins are in wallets inactive for over 10 years, out of a maximum supply of 21 million. The circulating supply is estimated between 15.8 million and 17.5 million Bitcoins.
The court noted, “For years, Prime denied that he had much Bitcoin at all. And Bitcoin was not on the list when he sought to recover missing assets after his release from prison,” adding it was “only later” that Prime claimed to be a Bitcoin tycoon. The delay prejudiced the government and made compensation unfair, “even if the Bitcoin existed.”
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