Court Rules Against Bitcoin Claim in FBI Evidence Case
A federal court has dismissed a lawsuit seeking $354 million in damages from the U.S. government over lost Bitcoin. The case involved Florida resident Michael Prem, who claimed the FBI erased a hard drive containing 3,443 Bitcoins during a criminal investigation.
The court found that the FBI followed proper procedures when handling seized electronic evidence. They wiped the device as part of standard protocol for managing digital evidence. But here’s where things get complicated – Prem didn’t officially declare ownership of these Bitcoins while he was in prison.
The Criminal Background and Evidence Handling
Prem had pleaded guilty to identity theft, device fraud, and illegal firearms possession back in 2019. During the investigation, law enforcement seized the hard drive from his property. The FBI maintained they simply followed established evidence handling procedures.
After his release from prison in 2022, Prem suddenly claimed the FBI destroyed the drive without proper authorization. He argued this action blocked his access to what would now be worth hundreds of millions in Bitcoin. But the timing raised questions.
Inconsistencies in Ownership Claims
The court pointed to significant inconsistencies in Prem’s statements. In February 2020, while still dealing with legal matters, his financial disclosure showed only $200 to $1,500 worth of Bitcoin. Yet after his release, he claimed to be a Bitcoin billionaire.
This discrepancy proved crucial in the court’s decision. The judges noted that Prem’s ownership claim came “too late” and that even if the Bitcoins were available, it would be “unfair to return them to him.”
Broader Context of Lost Bitcoin
This case touches on a larger issue in the cryptocurrency space. According to Glassnode data, about 7% of Bitcoin’s total 21 million supply has been permanently lost. These losses happen through various means – forgotten passwords, damaged hardware, or situations like this evidence handling case.
The ruling sets an interesting precedent about ownership claims and timing. It suggests that delayed claims of cryptocurrency ownership, especially when combined with inconsistent financial disclosures, may not hold up in court. The decision also reinforces that law enforcement agencies following standard evidence procedures generally won’t be held liable for subsequent cryptocurrency losses.
This case reminds cryptocurrency holders about the importance of proper documentation and timely claims. While the court didn’t question whether the Bitcoins existed on the drive originally, the timing and inconsistency of the ownership claim proved fatal to the lawsuit.
