CryptoSlate
Nine alleged fraud victims cannot contest the forfeiture of approximately 127,271 Bitcoin because they did not plausibly connect their losses to the specific seized wallets, Judge Rachel P. Kovner ruled in a Sept. 25 order. The Eastern District of New York judge struck timely claims filed by Ath Leepinyo and Connie Wilson and denied seven others permission to file late. She found that none of the nine had Article III standing to challenge the forfeiture.
Why it matters
The ruling draws a line between losing money in an alleged fraud and holding an interest in assets the government has seized. Kovner found that the claimants had established, at most, the position of general unsecured creditors. The order recognized that a constructive trust could establish an equitable ownership interest, but none of the nine plausibly traced their funds to the seized Bitcoin.
DOJ filed the civil forfeiture complaint on Oct. 14, 2025, saying the Bitcoin was in US custody and alleging links to fraud and money laundering involving Cambodian conglomerate Prince Holding Group and its chairman, Chen Zhi. The court has not finalized forfeiture.
Market impact
The decision does not transfer the Bitcoin to a reserve or determine its eventual disposition. Its immediate effect is legal: these nine claimants cannot contest the seizure through the claims the court rejected.
Kovner pointed to victim remission as a potential route if the government wins forfeiture. Under DOJ rules, petitioners must document a qualifying loss, meet other eligibility conditions and show they have not already been compensated. Remission is discretionary, and eligible victims may receive proportionate shares if forfeited proceeds cannot cover all recognized losses. The size of the seizure does not guarantee full repayment.
Frequently asked questions
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Why did the nine claimants lack standing to contest the Bitcoin forfeiture?
The judge found they had not plausibly connected their losses to the specific seized wallets. A loss from the alleged fraud alone did not establish an interest in that Bitcoin.
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What happened to the claims filed on time?
Judge Rachel P. Kovner struck the timely claims of Ath Leepinyo and Connie Wilson. She also denied seven other claimants permission to file late.
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Could a constructive trust have supported a claim to the seized Bitcoin?
The order recognized that a constructive trust could establish an equitable ownership interest. None of the nine claimants plausibly traced their funds to the seized Bitcoin.
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Can the claimants still seek recovery if the government wins forfeiture?
They could petition DOJ for victim remission if the government succeeds. Petitioners must document an eligible loss and meet other conditions, and recovery is discretionary.
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Did the court order the Bitcoin transferred to a reserve or guarantee repayment?
No. The ruling did not finalize forfeiture or transfer the Bitcoin to a reserve. The size of the seizure does not guarantee full repayment to eligible victims.
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