The U.S. Court of Appeals for the Eleventh Circuit has issued a ruling that has sent ripples through the cryptocurrency community, confirming that a Florida defendant will not receive compensation for approximately 3,443 bitcoin, currently valued at over $345 million. This decision stems from the case of Michael Prime, who faced charges relating to access-device fraud, aggravated identity theft, and illegal firearm possession.
The court’s opinion underscores a crucial legal principle known as laches, which prevents individuals from seeking relief when their prior actions have led to an unreasonable delay. Judge Elizabeth “Lisa” Branch Grant, leading the panel composed of Judges Jill Pryor and Marcus, stated that Prime’s extended period of disavowing significant ownership of cryptocurrency ultimately bars him from recourse.
The Key To The Case: An External Drive and Its Destruction
The specifics of the case, United States v. Prime, No. 23-13776, originated from a 2019 investigation that uncovered extensive counterfeiting operations and identity-theft tools. Throughout the proceedings, Prime had asserted that he owned only a negligible amount of bitcoin. By the time of his sentencing in June 2020, he was adamant that he had very little cryptocurrency, undercutting any claims to future wealth that he could potentially recoup from the government.
Judge Grant’s opinion noted that Prime represented on several occasions that he possessed “very little bitcoin.” After his release, he failed to notify authorities about any devices that might hold keys to valuable cryptocurrency when he sought the return of seized property. Consequently, the government proceeded with its established protocols, which included the destruction of devices after proper notice, including the orange external drive at the center of the contention.
In a twist of fate, it was not the FBI but rather the U.S. Secret Service that contacted Prime in mid-2022, offering to return certain devices if he cooperated by providing passwords. Instead, Prime opted for pro se motions, which did not reference the hard drive or any claims regarding his bitcoin, leading to its subsequent destruction.
The Eleventh Circuit was blunt in its assessment of causation and prejudice, stating, “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 now a relic of the past, the ruling makes it clear that convincing the government to recover almost 3,443 bitcoin—should it have ever existed—is not feasible.
Throughout the verdict, the panel expressed skepticism about Prime’s assertions regarding his cryptocurrency holdings. His attempt to clarify earlier claims of possessing “$200 to $1,500 in bitcoin,” where he insisted those figures referred to the market price of bitcoin rather than actual holdings, was met with disbelief. The court stood firm, highlighting that, during the relevant timeframe, bitcoin traded between $8,500 and $10,500 and that his previous assertions had not been substantiated by evidence.
In conclusion, the Eleventh Circuit affirmed the lower court’s ruling based on the doctrine of laches, reiterating that equitable relief cannot be granted to claimants whose long-standing denials have prompted governmental inaction and subsequently resulted in asset losses. This ruling closes the door on Prime’s hopes for restitution, reinforcing the legal imperative that individuals must act promptly and honestly when dealing with claims of asset ownership.
As of the latest market observations, bitcoin is trading at $102,825.
