Bitcoin Policy Institute joins fight to block claim on Satoshi’s coins

• Bitcoin Policy Institute filed to intervene as defendant in New York case targeting 3.7 million BTC, including 1.1 million from Satoshi-era addresses and 80,000 BTC from Mt. Gox hack
• Plaintiffs claim dormant wallets qualify as abandoned property under New York law Article 7-B, relying on 90-day notice sent via blockchain OP_RETURN messages
• Galaxy Research valued the targeted coins at $274 billion as of late May, but plaintiffs lack private keys necessary to move or control any funds

• 3.7M BTC Total cryptocurrency amount claimed as abandoned in New York lawsuit
• $274B Galaxy Research valuation of targeted coins as of late May 2024
• July 14 Scheduled hearing date after judge paused case for intervention arguments

A nonprofit research organization focused on cryptocurrency policy has escalated its involvement in an unusual lawsuit that could reshape how courts treat long-dormant digital assets.

The Bitcoin Policy Institute, represented by the law firm White & Case, has officially intervened as a defendant in a case filed in New York County Supreme Court that seeks to declare ownership of approximately 3.7 million bitcoin held in inactive wallets.

The plaintiffs, led by a person identified as Noah Doe, are invoking Article 7-B of New York’s Personal Property Law, a statute traditionally applied to physical lost-and-found items, to argue that cryptocurrency sitting unmoved for years should be transferred to their control.

The legal theory underlying the claim relies on a procedure typically used for tangible property: the plaintiffs say they identified dormant wallet addresses, reported them to the NYPD, sent messages through Bitcoin’s OP_RETURN field in an attempt to notify owners, waited 90 days, and then petitioned the court to declare the wallets abandoned.

However, the intervention by BPI signals that institutional voices in the crypto sector view the claim as a threat to fundamental principles of cryptocurrency ownership and custody. Judge Kathy J. King has paused the case pending a hearing scheduled for July 14, during which the court will consider arguments from BPI and others challenging the plaintiffs’ standing.

BPI and White & Case Mount Multi-Front Defense Against Abandoned Property Theory

The Bitcoin Policy Institute’s formal intervention represents the first major institutional defense in the case. Through its law firm White & Case, BPI has submitted a proposed answer, fifteen affirmative defenses, and signaled its intention to file a motion to dismiss the entire complaint.

This legal posture goes beyond simply contesting the plaintiffs’ specific claims and instead challenges whether New York’s abandoned property statute applies to cryptocurrency at all.

Two amicus briefs have already been filed against the plaintiffs prior to BPI’s intervention, one from attorney Ian Cohen and another from the Digital Chamber, a blockchain industry trade group. The accumulation of institutional opposition suggests that stakeholders view the case outcome as having implications far beyond the specific wallets in question.

An unfavorable ruling could expose billions of dollars in dormant cryptocurrency holdings across multiple jurisdictions to similar claims, establishing a legal pathway for third parties to petition courts for control of assets whose owners are unreachable or unknown.

The stakes extend to Satoshi Nakamoto’s early holdings, with approximately 1.1 million bitcoin from addresses associated with Bitcoin’s founder included in the targeted pool, alongside nearly 80,000 BTC traced to victims of the 2011 Mt. Gox exchange collapse.

Plaintiffs Lack Technical Ability to Move Coins Despite Claiming Ownership

A fundamental technical obstacle undermines the plaintiffs’ entire claim: they do not possess and cannot obtain the private keys required to move any of the targeted funds. Bitcoin’s architecture requires cryptographic signatures generated from private keys to authorize any transaction.

Possession of a public address alone, which the plaintiffs obtained by copying public data onto a USB drive, grants no control over the cryptocurrency associated with that address. This distinction is not merely technical detail; it is the core mechanism that separates cryptocurrency ownership from mere observation.

The practical weakness of the plaintiffs’ position became evident when they abandoned 44 addresses from their case after those wallets moved coins following the lawsuit’s filing.

Galaxy Research Director Alex Thorn pointed out that this activity directly contradicts the plaintiffs’ central argument: if the wallets were truly abandoned, their owners would not suddenly move funds in response to legal action.

The fact that dormant addresses activated upon learning of the lawsuit suggests owners exist and retain full control, undermining any claim that the property is unclaimed or that ownership is ambiguous.

The abandonment of 44 addresses after owners moved their coins exposes a critical flaw in the plaintiffs’ methodology and their legal framing of the dispute.

Pro Se Defendant John Doe 33 Raises Questions About Notice and Legal Personhood

A separate defense has emerged from a pseudonymous defendant identified as John Doe 33, who filed a verified answer and affirmative defenses on July 8 without legal representation. John Doe 33 claimed a personal stake in the outcome, stating his portfolio exceeded $80 billion when the case was filed.

His legal arguments focus on a more fundamental objection: public Bitcoin addresses are not legal persons and therefore cannot be parties to a lawsuit in the traditional sense.

This argument challenges the logical foundation of the plaintiffs’ case. The plaintiffs are attempting to treat dormant wallet addresses as lost property abandoned by identifiable owners, but Bitcoin addresses themselves are not entities with legal standing or obligations.

John Doe 33 emphasizes that the plaintiffs performed no actual discovery or possession, they copied publicly available blockchain data, an act that creates no legal claim to the underlying assets.

He further argues that the plaintiffs’ method of attempted notice through OP_RETURN messages is inadequate because many wallets do not display these messages, and users of cold storage do not monitor the blockchain for incoming messages.

John Doe 33 also presented evidence that at least one identified owner had directly contacted the plaintiffs’ legal counsel by telephone, directly refuting the claim that wallet owners were unknown or unreachable. This allegation, if supported in discovery, would eliminate the plaintiffs’ core justification for the 90-day waiting period and abandonment claim.

Market Impact and Precedent Risk Driving Institutional Response

The valuation of targeted assets at $274 billion, as calculated by Galaxy Research in late May, provides context for why institutional and policy-focused organizations view the case as significant. However, multiple analysts and researchers have flagged the plaintiffs’ claim as technically and legally unenforceable.

The absence of private keys means no judgment could actually result in the transfer of funds; a court order declaring ownership would be meaningless without the ability to move the cryptocurrency.

Nevertheless, an adverse ruling could establish problematic precedent in other jurisdictions or inspire similar claims against dormant holdings. The involvement of BPI suggests that the crypto policy community is treating this case as a watershed moment for how courts understand and apply property law to cryptocurrency.

If courts begin treating long-dormant wallets as abandoned property subject to state claims, it could undermine the security assumptions that make cryptocurrency attractive to long-term holders and create regulatory uncertainty for custody providers.

The case outcome will likely shape how courts in other states approach similar claims and whether institutional investors face renewed risk to holdings placed in cold storage.

The hearing scheduled for July 14 will determine whether Judge King accepts BPI’s motion to dismiss or allows the case to proceed to discovery. The court’s decision on whether Article 7-B of New York’s Personal Property Law applies to cryptocurrency at all will be the critical pivot point; if the judge rules that the statute does not extend to digital assets, the plaintiffs’ entire claim collapses. BPI’s strategy of filing fifteen affirmative defenses suggests preparation for a protracted case, and the accumulation of amicus briefs signals that the outcome will be closely watched by both the blockchain industry and state attorneys general considering their own abandoned property claims.

Original reporting: cryptopolitan.com