$345 Million In Bitcoin Gone — But FBI Isn’t At Fault, Judges Say

The US Court of Appeals for the Eleventh Circuit has affirmed a district court’s refusal to award a Florida defendant the value of roughly 3,443 bitcoin—now “worth over $345 million”—after the government destroyed an external hard drive he belatedly claimed held the keys, holding that the equitable doctrine of laches bars relief because he spent years denying he owned meaningful ￰0￱ published opinion, authored by Judge Elizabeth “Lisa” Branch Grant and joined by Judges Jill Pryor and Marcus, leaves intact the lower court’s ruling that the United States cannot be compelled to replace the bitcoin, even assuming the drive ever contained ￰1￱ Not To Blame For 3,443 Bitcoin Hard Drive Wipe The case, United States v.

Prime, No. 23-13776 , arose from a 2019 arrest that uncovered extensive counterfeiting and identity-theft ￰2￱ Prime ultimately pleaded guilty to access-device fraud, aggravated identity theft, and illegal firearm ￰3￱ the investigation’s early days, agents tried and failed three times to locate cryptocurrency tied to his activities under federal warrants; by sentencing in June 2020, Prime and his counsel had walked back earlier references to thousands of bitcoin, representing instead that his remaining crypto was ￰4￱ government proceeded ￰5￱ Judge Grant summarized, Prime “at least three times” represented he owned “very little bitcoin,” and after release he still did not identify any device as holding valuable keys when he sought the return of ￰6￱ government followed its “ordinary practices,” wiping devices it could after notice; the rest—including the orange external drive at issue—were destroyed.

“Only later did Prime claim to be a bitcoin tycoon ,” the court wrote. “By then it was too late.” Although headlines have centered the FBI, the record shows it was the US Secret Service that contacted Prime in mid-2022 offering to wipe and return certain devices if he provided ￰7￱ asked for a pickup time, then filed pro se motions instead; none of those filings mentioned bitcoin or a hard ￰8￱ drive was later destroyed with other electronics because Prime refused to cooperate in removing contraband ￰9￱ Eleventh Circuit underscored causation and prejudice: “We have little difficulty concluding that the government would not have destroyed the hard drive if it had thought that it contained millions of dollars in bitcoin.” With the drive gone, “the government cannot return it,” and to the extent the bitcoin ever existed—“and we have our doubts”—ordering the United States to “find and hand over almost 3,443 replacement bitcoin” would be prejudicial “now to the tune of over $345 million.” The panel was openly skeptical of Prime’s attempts to reframe his ￰10￱ argued, for example, that when he reported “$200 to $1,500 in bitcoin” in February 2020, he meant the then-market price of a single bitcoin, not his holdings.

“We don’t buy it,” the court wrote, noting that in February 2020 BTC traded between “about $8,500 and $10,500” and that Prime had promised “complete, accurate and truthful” asset disclosures encompassing any asset in which he had “any interest” or ￰11￱ opinion quotes defense counsel’s own admission at sentencing that the original claim to “some great amount of bitcoin” was “not supported by the evidence.” Having affirmed on laches, the Eleventh Circuit did not reach broader questions, such as whether any BTC—if it existed—would have been ￰12￱ court also noted Prime forfeited any challenge to the factual finding that the drive was destroyed by failing to raise it ￰13￱ narrow holding is that equitable relief is unavailable where a claimant’s multi-year denials induced the government to stop searching for assets and to process seized electronics in the ordinary course—conduct the panel repeatedly tied to his non-cooperation and delay rather than to any governmental bad ￰14￱ Judge Grant summarized the district court’s bottom line, “laches barred his bitcoin ￰15￱ agree and affirm.” At press time, BTC traded at $102,825.