NY judge halts 39,069-BTC ownership suit, sets July 14 hearing

A New York Supreme Court justice on Friday stayed all proceedings in a lawsuit seeking declaratory ownership of 39,069 dormant bitcoin wallets, blocking any move toward default judgment ahead of a July 14 oral argument. Justice Kathy J. King signed the order to show cause on June 4 and it was filed publicly June 5, with argument set for 10:30 a.m. in Part 6 of the New York County courthouse at 60 Centre Street.

The case, captioned ABC Company, XYZ Company, and Noah Doe v. John Does 1-39,069, seeks a ruling under New York Personal Property Law Article 7-B that dormant bitcoin wallets constitute abandoned property subject to transfer of ownership. The 39,069 addresses were estimated by Galaxy Research in May to hold roughly 3.8 million BTC — about $234 billion at current prices, or $293.5 billion at the figure Galaxy used at the time. The complaint itself values each wallet at less than $10, citing the difficulty of recovering the assets.

The defendant list includes the 1Feex address, which holds roughly 80,000 BTC and has long been linked in public reporting to the 2011 Mt. Gox hack, as well as wallets that Galaxy says match "Patoshi" patterns attributed to Bitcoin's creator. The plaintiffs "served" the wallets by directing OP_RETURN messages to each address pointing to an abandonment notice page hosted by Salomon Brothers Strategic Advisors, a campaign Galaxy documented in October as the "Great Bitcoin Dusting."

Why it matters

The stay arrived in response to a May 29 motion from Ian R. Cohen, a self-custody bitcoin holder and M&A attorney, seeking to appear as amicus curiae and oppose the plaintiffs' theory. Cohen's 26-page brief argues that the lost-and-found statute presumes physical custody of a tangible object — not blockchain addresses that "remained continuously visible to the entire world." A New York state-court declaration of private ownership over the 1Feex address, Cohen writes, could conflict with the civil rehabilitation proceedings in Japan and potential US Department of Justice criminal forfeiture interest.

The brief also turns the plaintiffs' own complaint against them: if the targeted owners cannot withdraw because of a security flaw, their dormancy reflects "involuntary deprivation of access," not voluntary abandonment. Cohen further notes that New York's Abandoned Property Law was specifically amended in 2022 to route dormant virtual currency to the State Comptroller — a framework the Legislature chose over Article 7-B.