A federal appeals court has turned down a Florida man’s attempt to reclaim over $354 million in Bitcoin, which he alleged was lost following the destruction of a hard drive seized during his 2019 arrest. The Eleventh Circuit’s ruling confirmed that the man, Michael Prime, had waited too long to assert his claim, thereby hindering the government’s ability to return the destroyed property.
Prime’s case centered around his assertion that the hard drive contained the cryptographic keys to access his Bitcoin holdings. However, before his arrest, Prime had consistently stated to officials that he possessed very little cryptocurrency. This included statements made to investigators and during court proceedings, where he claimed ownership of negligible amounts. It was only later that he dramatically raised his claims, alleging that he possessed approximately 3,443 Bitcoin.
Due to these earlier denials, federal agents ceased their search for any Bitcoin associated with Prime, ultimately leading to the destruction of the hard drive and other devices linked to his case. The circuit judges noted that the prolonged denial of his Bitcoin ownership was crucial to their decision, underscoring how it contributed to an “inexcusable delay” in his claim.
After serving over five years in prison for various charges, including identity theft and illegal possession of firearms, Prime sought the return of the hard drive under Rule 41(g). This rule allows defendants to request the return of seized property once their case concludes. However, the district court had already ruled against him in 2024, determining that the destruction of the devices was justified and that his late claim was moot.
In their ruling, the Eleventh Circuit noted that granting compensation would be unfair due to the lack of evidence supporting Prime’s later claims. They emphasized that any delay in pursuing his claim would have prejudiced the government’s case.
Bitcoin, as a digital asset, is not stored directly on a hard drive; rather, it resides on a blockchain—a decentralized ledger accessible to numerous computers globally. Hard drives can store these crucial private keys or wallet files needed to access Bitcoin. Without these keys, the Bitcoin remains effectively lost, as ownership cannot be demonstrated or transferred.
Estimates suggest that a significant portion of Bitcoin is permanently inaccessible, with reports indicating that between 2.3 million and 4 million Bitcoin may be lost forever. This figure represents a substantial share of the cryptocurrency’s total supply, highlighting the impact of lost coins on the overall market. The pseudonymous creator of Bitcoin, Satoshi Nakamoto, once remarked that lost coins only marginally increase the value of other available coins, likening it to an unintended donation to the rest of the market.
