Lawsuit targeting 39,069 dormant Bitcoin wallets narrows as 44 defendants dropped

A New York lawsuit seeking legal ownership of 39,069 dormant Bitcoin addresses narrowed on July 7 after plaintiffs voluntarily dropped 44 defendants who transferred funds after the case was filed, according to a court filing.

"The voluntary discontinuance removes only a small slice of the 39,069 wallets targeted by the case," Alex Thorn, head of research at Galaxy Digital, said. The listed addresses hold an estimated 3.7 million to 3.8 million BTC, worth about $293 billion at current prices, according to Sani, founder of Bitcoin analytics platform Timechain Index.

The plaintiffs — operating under the name "Noah Doe" alongside two Wyoming-based limited liability companies — brought the claim under Article 7-B of the New York Personal Property Law, which governs lost and found property. They valued each wallet below $10 for jurisdictional purposes, though the addresses include wallets linked by researchers to Bitcoin creator Satoshi Nakamoto's early mining activity and one tied to the 2011 Mt. Gox hack. The Digital Chamber, a trade association representing more than 250 crypto firms, filed an amicus brief opposing the lawsuit, arguing that treating inactive wallets as abandoned property could create legal uncertainty for self-custody users.

The narrowing of the case comes as some targeted wallets have shown signs of life. At least 31 of the listed addresses moved 17,527 Bitcoin in June, up from five addresses that transferred 4,834 BTC in February, Thorn said. One address, "1KV47," transferred 30 BTC worth about $1.88 million on Saturday, marking its first transaction in nearly 15 years since August 2011. The movements suggest some wallet controllers still hold their private keys, complicating any claim that long inactivity alone proves abandonment.

A pseudonymous defendant pushes back

A party using the name "John Doe 33" entered the case on June 30, filing a notice of appearance and a motion to dismiss. The defendant described himself as "a natural person and a real human being" who holds constitutionally protected property rights, arguing he is not "a Bitcoin blockchain address string, a digital wallet, a line of source code, or any other form of inanimate data."

Blockchain data suggests John Doe 33 controls a wallet holding 5,000 BTC received in April 2014 that has remained untouched for more than 12 years, making it worth more than $300 million at current prices, according to Thorn. "That's roughly 100 times the median defendant address," Thorn said. "This is a real holder with real standing choosing to fight, not a bystander."

The filing prevented what had been a near-certain default judgment and challenged jurisdictional and statutory defects in the plaintiffs' case, Thorn added. John Doe 33 also filed a separate request to litigate under a pseudonym, arguing that appearing openly would expose him to doxxing, extortion and physical harm.

What's at stake for self-custody

The case raises a core question for digital property ownership: whether inactivity on a blockchain can be used to challenge control of assets when the private keys are unknown or unavailable. The Digital Chamber warned in its amicus brief that a ruling in favor of the plaintiffs could create a "pervasive cloud on title across self-custody wallets," affecting the "foundational principles of digital property ownership."

Even if the plaintiffs win a legal claim, controlling the Bitcoin would still require the private keys — a hurdle the lawsuit has not addressed. A New York Supreme Court judge has stayed proceedings ahead of a July 14 hearing, blocking any move toward default judgment while the court reviews early challenges. The outcome could set a legal precedent affecting the roughly 3.5 million BTC that have been dormant for the past 10 years and another 6.6 million coins dormant for over five years, according to Bitbo data.

This article is for informational purposes only and does not constitute investment advice.