U.S. Court: "FBI not liable for deletion of $345 million worth of bitcoin"

A U.S. federal appeals court found that the Federal Bureau of Investigation (FBI) was not negligent in deleting a hard drive that held roughly 3,400 bitcoins. The court said there is no liability for damages because the defendant did not disclose the existence of the asset to the government while incarcerated.

According to Cointelegraph on the 5th (local time), the Eleventh Circuit Court of Appeals ruled in a lawsuit brought by Michael Prime, who was convicted of identity theft, that "the FBI is not responsible for the deletion of a hard drive containing about 3,443 bitcoins (approximately $345 million)."

The court wrote in its opinion that "Prime had for years claimed he owned almost no bitcoin, and when he sought the return of lost property upon release, bitcoin was not listed," adding that "he only later began to claim he was a 'bitcoin billionaire.'"

The court added that "Prime's assertion of property rights came too late, and even if the bitcoins existed, returning them to him would not be equitable."

Prime entered a guilty plea in November 2019 admitting to device fraud, identity theft, and unlawful possession of a firearm, and in the financial disclosure he submitted to the government at that time he listed his bitcoin holdings as being in the range of $200–$1,500. The court noted that "Prime later explained this as a 'mistake of thinking it was the market price of one bitcoin,' but called that an absurd claim," pointing out that "in February 2020 the price of bitcoin exceeded $10,000."

Prime was released after serving two years and sought the return of the hard drives, but the data had already been deleted under FBI procedures.

Meanwhile, blockchain data analytics firm Glassnode estimates that currently about 7% of the total bitcoin supply is permanently lost.