• Bitcoin case ends with a U.S. court clearing the FBI over an erased 3,400-coin hard drive.
• Judges reject Michael Prime’s lawsuit, citing denial of Bitcoin ownership.
• The ruling confirms lost cryptographic keys make Bitcoin funds unrecoverable.

Bitcoin has become the center of attention in a court case in the U.S. following a sustained appeal in which the FBI was not accountable to erase a hard drive that reportedly held in excess of 3,400 Bitcoin. The court claimed the guilty owner, Michael Prime, did not inform the authorities that the device had a cryptocurrency. He lost any legal claim to obtain the digital assets because he failed to disclose it.

The decision was made on Tuesday by the Eleventh Circuit Court of Appeals, which rejected the lawsuit filed by Prime against the U.S. government. A 3-judge panel had found that its own actions and contradicting statements nullified the claim made by Prime. According to the court decision, his silence regarding the Bitcoin in the previous proceedings compromised his right to file a damage case in the future.

Court Rejects Bitcoin Owner’s Lawsuit Over Erased Hard Drive

In 2019, Prime was found guilty of identity theft, device fraud, and illegal possession of a firearm. He claimed that the FBI wiped his hard drive, which contained 3,443 Bitcoin worth approximately $345 million. The agency had never retained the device because its routine procedure for evidence destruction was followed when Prime requested its retrieval.

In July 2022, Prime asked for the hard drive to be returned after serving a two-year prison term. By then, it was already erased. He charged the FBI with destroying his property illegally, but the court abandoned the matter. Judges determined that Prime had no right to claim ownership because it took him too long to do so and was not reasonable.

Over the years, Prime refused to acknowledge that he owned a lot of bitcoin to begin with, the panel wrote. When he was released, Bitcoin was not the first asset that he decided to reclaim. Later on, Prime boasted of being a bitcoin tycoon. The court argued that he would not enjoy fair treatment even though the Bitcoin may not have been in existence, as it had doubted.

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One of the records indicates that in November 2019, prior to admitting a plea agreement, Prime had stated that it owned about 3,500 BTC. However, when he pleaded guilty, he changed his financial statements. In February 2020, he stated that he only owned between $200 and $1500 worth of BTC. He also informed the probation office that this was all the assets he had.

Source: Eleventh Circuit

Bitcoin Lost Forever as Court Rejects Final Appeal in $345 Million Case

Prime would later attempt to justify the difference by claiming that they represented the price of a single Bitcoin, but not his entire investments. The judges outright dismissed this kind of explanation, claiming it was preposterous. They pointed out that the price of BTC at that time was over $10,000, and his report could not be justified.

The Orlando federal court had previously rejected the claim that Prime recover the destroyed drives, and the court of appeals affirmed that order. It decided that the years of denial and inconsistent statements of Prime and delay in claiming compensation rendered him ineligible to claim.

The decision shows one of the most cruel realities of cryptocurrency: since the cryptographic key to unlock Bitcoin is lost or destroyed, the coins are forever inaccessible. There is nobody, no power that can put them back.

Glassnode data shows that approximately 1.46 million Bitcoins, or nearly 7% of the total supply of the currency, are considered permanently lost. In 2018, Chainalysis reported that the number had reached 3.7 million Bitcoin, almost 17.5% of all ever made.

To Michael Prime, there will be no hope of retrieving his supposed fortune. His BTC, should it have ever existed, is gone forever into the blockchain abyss.

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