A New York court has halted a lawsuit seeking to claim roughly 3.799 million Bitcoin held in 39,069 long-dormant addresses, preventing the anonymous plaintiff known as Noah Doe from pursuing default judgments before a Sept. 8 hearing.
The pause leaves unresolved an unusually expansive legal theory: that New York’s lost-property rules could allow a claimant to take title to Bitcoin whose owners have not moved it for years. The complaint includes about 1.09 million Bitcoin connected to 21,744 addresses widely associated with Bitcoin creator Satoshi Nakamoto, along with holdings attributed to thousands of other inactive wallets.
Judge Kathy J. King first stayed the case on June 4 and later held oral argument on July 14 over whether New York’s lost-property framework can extend to blockchain assets. Following that hearing, the court issued further orders to show cause on July 16 and again barred efforts to obtain default judgments before the September proceeding.
Under Doe’s original approach, defendants that did not appear within 30 days after service could have faced a default process that the plaintiff argued would transfer control or ownership rights over the associated holdings. The court’s intervention has stopped that route while it considers threshold questions over jurisdiction, procedure and the treatment of private-key-controlled assets under state law.
Dormant addresses began moving after suit became public
The litigation has coincided with significant activity from addresses named in the complaint, complicating the premise that dormant coins are necessarily lost or abandoned.
On June 2, an address that had not transacted since March 2011 moved 35.55 Bitcoin, worth about $2.2 million at the time. Four days later, an address identified in the complaint as defendant No. 37923 moved 47.26 Bitcoin, valued near $3 million.
Another named address, No. 1504, moved 199.216 Bitcoin on June 19 after remaining inactive since 2012. The transfers offered a practical rebuttal to any argument based solely on the length of inactivity: a Bitcoin holder can retain access to an address indefinitely and transact whenever they choose, provided they retain the private key.
Galaxy Research reported that 52 defendant addresses had moved 34,335 Bitcoin, worth approximately $2.163 billion, after the lawsuit was filed. Its analysis said 29 of those addresses, holding 12,302 Bitcoin, moved funds after their associated parties received subpoenas.
Doe’s attorney, David D. Lin, filed a request on June 18 to lift the earlier stay and resume the case, citing the movement of assets from addresses at issue. The effort did not advance before one owner connected to the address identified as defendant No. 33 entered the case.
Defendant challenges the lawsuit’s legal foundation
The No. 33 party filed a notice of appearance and motion to dismiss on June 30, arguing that a Bitcoin address is neither a natural person nor a legal entity that can be sued or brought under a court’s jurisdiction.
The filing also argued that the New York lost-property provisions cited by Doe were written for tangible property that can be physically found, turned over to police and held by authorities. Bitcoin, by contrast, exists on a distributed ledger and can be transferred only through the private keys controlling the relevant address.
The defendant further raised a procedural concern over the plaintiff’s anonymity. Doe has proceeded under a pseudonym, while holders who wish to contest the claim would need to identify themselves in court filings. For people controlling large Bitcoin balances, public identification can create security and privacy risks extending beyond the lawsuit.
The Bitcoin Policy Institute added its own challenge on July 11, filing a motion urging the court to dismiss the action. The organization argued that multi-year inactivity is common among Bitcoin holders and does not establish that property has been abandoned.
On July 7, Doe withdrew claims against 44 addresses that had become active. Those addresses held around 21,443 Bitcoin when the suit began, according to case materials, and later moved more than 46,000 Bitcoin valued at over $2.9 billion. The number of addresses remaining in the lawsuit fell to 39,025.
One removed address, No. 106, held approximately 2,100 Bitcoin at the outset of the case but moved more than 20,000 Bitcoin through several transactions between March and July. The larger total reflects repeated transfers involving the address rather than a single balance.
Federal bill would protect self-custodied assets from inactivity claims
The New York dispute has developed alongside a proposed federal limitation on state abandoned-property claims involving self-custodied digital assets.
A revised draft of the CLARITY bill released July 22 includes Section 20216, which defines self-custodied digital assets as assets for which an owner has exclusive control over the private keys needed to authorize transactions. The provision states that such assets could not be deemed abandoned, unclaimed or subject to forfeiture, escheat, adverse possession, finder’s claims or similar legal theories based solely on inactivity.
If enacted in its current form, the language would override state and local rules that attempt to treat long-unused self-custodied Bitcoin as abandoned. It would draw a different line for assets held by custodians, where state unclaimed-property laws could continue to apply.
The Senate’s timetable for the bill remains uncertain amid a partisan disagreement over ethics provisions. Its inclusion in the draft nevertheless places the New York case within a growing policy debate over whether possession of private keys, rather than transaction frequency, should determine who retains legal rights over digital assets.
The Sept. 8 hearing will address the immediate state-law question. Its outcome could determine whether a court can treat the silence of a Bitcoin address as evidence of abandonment, even when the address may remain fully controlled by an owner who has simply chosen not to move the coins.
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