I've covered a lot of unusual legal battles in crypto. But what's playing out in a New York court right now is unlike anything I've seen before, and the stakes, at $238 billion, are almost too large to fully absorb.
A lawsuit filed by anonymous plaintiffs, identified only as ABC Company, XYZ Company, and Noah Doe, is seeking legal control over 39,069 Bitcoin wallet addresses. At current prices, those wallets collectively hold an estimated $238 billion in Bitcoin. The targeted addresses include wallets believed to be linked to Satoshi Nakamoto and the notorious "1Feex" address, which researchers have associated with Bitcoin stolen in the Mt. Gox hack.
The plaintiffs argue these dormant wallets qualify as abandoned property under New York law and should be subject to court-ordered transfer.
Cohen Stepped In, and the Court Paused Everything
Attorney Ian R. Cohen filed an amicus brief in May challenging the legal foundation of the case. After reviewing it, New York Justice Kathy King ordered a stay on the proceedings. A hearing on Cohen's amicus application is now scheduled for July 14.
The plaintiffs pushed back against the stay. Cohen filed a detailed rebuttal on June 19, and that's where the case stands today.
His argument is direct: New York's lost property laws simply do not apply to self-custodied Bitcoin. Inactivity alone does not constitute abandonment. And private keys fall entirely outside the jurisdiction of New York courts. On top of that, Cohen points out the defendants are not identifiable individuals, they are 39,069 pseudonymous Bitcoin addresses. Without real owners showing up to defend their property, the plaintiffs could potentially secure a default judgment by default, affecting billions in assets with virtually no opposition.
The Abandonment Argument Has a Fatal Flaw
The plaintiffs' core claim is that the original wallet owners can no longer access their Bitcoin due to an alleged technical flaw, and therefore the funds should be deemed abandoned. Cohen's filing directly challenges that with onchain data.
The complaint itself referenced wallet addresses that have recorded outbound transactions, meaning someone with the private keys moved funds. That's not an abandoned wallet. That's an active one. Galaxy Digital research head Alex Thorn corroborated this, noting that Galaxy researchers identified 52 of the named addresses that collectively moved over 34,000 BTC. Strikingly, 29 of those addresses moved funds after receiving notice of the lawsuit.
That's not abandonment. That's the opposite.
The Broader Implications Are Serious
Ripple CTO Emeritus David Schwartz raised a fundamental jurisdictional question that I think gets to the heart of this: how does a New York court assert authority over Bitcoin wallets whose owners are unknown and could be located anywhere in the world on a decentralized network?
It's a question the plaintiffs haven't answered convincingly. And if this theory ever succeeded, the implications for every dormant crypto wallet globally would be deeply alarming.
Separately, Binance founder Changpeng Zhao recently suggested that post-quantum cryptography transitions could one day prompt discussions about freezing wallets linked to inactive owners, but stressed any such change would require full community consensus.
For now, the July 14 hearing is the next moment that matters. Cohen is fighting hard. And the Bitcoin community should be paying very close attention to what happens in that New York courtroom.