Key Highlights
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New York Supreme Court halts proceedings in Bitcoin wallet ownership case
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Default judgment attempt blocked pending scheduled July hearing
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Legal challenge targets nearly 40,000 inactive Bitcoin addresses
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Attorney files amicus brief contesting lost-property statute application
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Case involves Bitcoin holdings potentially valued at hundreds of billions
A New York Supreme Court justice has temporarily frozen legal proceedings involving a controversial attempt to claim ownership of 39,069 inactive Bitcoin addresses. The court order prevents any default judgment from moving forward until a scheduled hearing takes place in mid-July. This lawsuit attempts to establish legal control over dormant Bitcoin wallets by invoking New York’s abandoned property laws. The temporary stay provides additional time for legal opponents to mount their challenge.
Court Issues Temporary Stay on Proceedings
Justice Kathy J. King issued an order to show cause dated June 4. Court records show the document was filed publicly the following day, June 5. This order effectively suspends all ongoing activities related to the plaintiffs’ request for declaratory judgment.
The judicial order specifically prevents any inquest proceedings or default judgment from being entered prior to oral arguments. The court has scheduled these arguments for July 14 at the New York County Supreme Court. Until that date arrives, the plaintiffs are prohibited from pursuing their ownership claims further.
Notably, Justice King eliminated typical procedural language that would have automatically extended the stay past the hearing date. Consequently, the suspension remains in effect only until the scheduled court appearance. Additionally, a separate judicial decision rendered an earlier motion for injunctive relief unnecessary.
Plaintiffs Seek Control Over Inactive Addresses
The legal action identifies ABC Company, XYZ Company, and an individual called Noah Doe as the claiming parties. Their lawsuit names John Does associated with 39,069 inactive Bitcoin addresses as defendants. The legal argument relies on New York Personal Property Law Article 7-B to establish ownership rights.
According to the complaint, Noah Doe developed and utilized a specialized algorithm to locate wallets believed to be abandoned. The filing states he subsequently notified the New York Police Department about these addresses through multiple submissions. Following this, blockchain-based notifications were transmitted to numerous addresses using OP_RETURN message functionality.
The plaintiffs’ legal strategy characterizes dormant Bitcoin wallets as abandoned property when owners fail to respond. This novel application of lost-property statutes to blockchain assets has not been validated by New York courts. The case encompasses addresses connected in public documentation to significant events in Bitcoin’s development and history.
Independent Attorney Contests Legal Theory
Ian R. Cohen, a New York-based lawyer and Bitcoin owner, has requested permission to participate as amicus curiae. He maintains no direct representation of any party involved in the litigation. His submitted brief directly challenges how the plaintiffs apply lost-property statutes.
Cohen contends that the relevant statute applies exclusively to physical property in the possession of someone who found it. He maintains that blockchain addresses fall outside this legal framework. His argument further states that identifying addresses through algorithmic analysis cannot be equated with physically discovering tangible property.
The brief emphasizes fundamental issues regarding control and ownership. Cohen asserts that inactive addresses may still be under the control of original owners who retain their private keys. Therefore, lack of activity or communication cannot definitively establish abandonment.
Galaxy Research had previously calculated that the specified addresses contained approximately 3.8 million BTC. Using pricing data from May, that quantity represented roughly $293.5 billion in value. Despite this, the complaint assessed each wallet at under $10 based on uncertainty regarding successful recovery.
The amicus submission also expressed concerns about addresses potentially associated with Mt. Gox and early Satoshi-era mining activity. These connections could trigger conflicts with existing legal proceedings and historical ownership questions. The scheduled July 14 hearing will determine how the case proceeds.
