New York court pauses bid to claim 39,069 bitcoin wallets, sets July hearing

Traders Union
All News
Crypto
New York bitcoin wallet case paused

Highlights

Justice Kathy J. King paused all proceedings over the claim to 39,069 bitcoin wallets, scheduling a July 14 hearing in New York County Supreme Court.
The disputed wallets reportedly hold about 3.8 million BTC valued at $234 billion at current prices, although the complaint’s expert values each wallet at less than $10 due to access uncertainty.
Attorney Ian R. Cohen’s amicus brief argues New York abandoned property law should not apply to inaccessible blockchain wallets, citing legal, custody, and international jurisdictional risks.

Court order halts path toward default judgment

As first reported by The Block, Justice Kathy J. King signed an order to show cause on June 4 and the filing became public on June 5, staying all further proceedings on the plaintiffs' declaratory judgment claim until a July 14 hearing in New York County Supreme Court.

The order pauses any application for an inquest or a default judgment while the court considers whether to allow attorney Ian R. Cohen to appear as amicus curiae. In a separate ruling filed the same day, King also found an earlier motion for injunctive relief to be moot, citing the plaintiffs' First Amended Complaint filed May 1 and another docket entry.

The case, filed as ABC Company, XYZ Company, and Noah Doe v. John Does 1-39,069, seeks a declaration that the plaintiffs own tens of thousands of bitcoin wallets under New York Personal Property Law Article 7-B. The theory is that unclaimed property can pass to a finder after a statutory period, although the statute has not previously been applied to digital assets recorded on a blockchain.

Galaxy Research estimated in May that the 39,069 addresses held about 3.8 million BTC, valued at roughly $293.5 billion at the bitcoin price used at that time. At current prices cited in the report, that amount would be worth about $234 billion, though the complaint says an unnamed expert valued each wallet at less than $10 because of the uncertainty of recovering any value from the assets without access keys.

Legal challenge raises custody and jurisdiction risks

Cohen, an M&A attorney at IRC Legal Advisors LLC, asked the court for permission to file a brief opposing the plaintiffs' theory, stating that he represents no party and has no financial interest in the outcome. His submission argues that New York's lost-and-found statute assumes physical custody of tangible property, a condition he says cannot be met for blockchain addresses that remain publicly visible and are not physically possessed by the alleged finder.

The brief also argues that inability to access a wallet because of a security flaw is not voluntary abandonment. Cohen says a dormant wallet may still be securely held if the private key exists, even if no transaction has occurred for years, and he contends that an ownership declaration would be functionally useless without the private keys themselves.

He further warns that some addresses named in the suit could create conflicts with other proceedings. The brief says the 1Feex wallet, long linked in public reporting to the 2011 Mt. Gox hack, may overlap with Japanese civil rehabilitation proceedings and possible U.S. Department of Justice forfeiture interest, raising preemption and international comity concerns.

The complaint says Noah Doe used a proprietary algorithm to identify the wallets, delivered wallet lists on USB drives to the NYPD's 17th Precinct between December 2024 and April 2025, and sent OP_RETURN messages directing owners to an abandonment notice page. Galaxy Research described a similar October campaign as the "Great Bitcoin Dusting," involving roughly 41,000 messages to wallets holding about 2.3 million BTC.

Several wallets listed as defendants have moved funds since the lawsuit was filed, undermining the premise that none of the owners would surface. The plaintiffs have until July 7 to file opposition papers to Cohen's motion under the briefing schedule set by the court.

In our earlier article on Coinbase’s Bitcoin-collateralized mortgage backed by Fannie Mae, we noted that the first such loan has now originated in the U.S., signaling that BTC-backed lending is moving from concept to real-world execution. We also highlighted that a broader rollout is planned for this summer, underscoring how digital assets are becoming more intertwined with traditional U.S. financial infrastructure even amid market volatility.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.