A U.S. federal appeals court has rejected a Florida man’s effort to reclaim Bitcoin he said was lost when authorities destroyed a seized hard drive. The Eleventh Circuit Court of Appeals ruled that Michael Prime waited too long to file his claim, leaving the government no way to return property that had already been destroyed.
A court decision made public on Tuesday sustained the ruling of a lower court which had declared that the request of Prime was invalid due to the delay and inconsistent statements on his part. The judges observed that for a long time, Prime always denied that he owned any substantial amount of Bitcoin and when he was first trying to get back his possessions after being released from prison, he never even mentioned the currency.
As per the court documents, Prime was apprehended in 2019 and later convicted for credit card fraud, identity theft, and illegal possession of firearms. He never admitted to having any digital currency, and neither did he talk about it throughout the trial. After his revelation of finances in February 2020, he informed the officials that he possessed Bitcoin worth between $200 and $1,500, and he considered it as his sole property.
The judges noted that the sudden proclamation of Prime that he possessed about 3,500 Bitcoin only came to light when he was freed from jail. "For years, Prime claimed that he did not have much Bitcoin at all," read the opinion. It went on to say that his later argument regarding the previous low valuation - claiming he meant the price of each coin - was "preposterous," as at that time Bitcoin was trading for more than $10,000.
Prime served two years in prison before moving to a halfway house. Once released, he requested the return of several hard drives that had been taken during his arrest. By then, those devices were gone. Authorities confirmed they had been destroyed according to standard procedure.
He later filed a motion under Rule 41(g), which lets defendants ask for seized property back after a case closes. A district judge in Orlando denied it in 2024, saying the hard drives were properly destroyed and the delay made the claim too late to consider. The appeals panel agreed, ruling that his “inexcusable delay” prevented any recovery and that compensation would be unfair “even if Bitcoin existed.”
Experts say Prime’s case highlights how easily Bitcoin can be lost once the digital keys vanish. The tokens themselves exist on the blockchain, but access depends on unique cryptographic keys stored in wallets or drives. When those are destroyed, the funds are effectively gone.
Blockchain analytics firm Glassnode estimates that about 1.46 million Bitcoin - roughly 7% of the total supply - can never be recovered. Chainalysis placed the figure higher, suggesting up to 3.7 million coins may be lost. More recent research by River Financial in 2025 estimated between 2.3 million and 4 million Bitcoin are permanently inaccessible, accounting for about 11% to 18% of the total supply.
The report added that roughly 3.8 million Bitcoins sit in wallets that have not moved in more than a decade, leaving an active supply closer to 16 million coins.
Michael Prime’s legal battle to recover $354 million in Bitcoin ended with the Eleventh Circuit’s ruling against him. The court confirmed that his late filing and the destroyed hard drive made recovery impossible, underscoring the irreversible nature of lost cryptocurrency assets.
Read More: AI Ethics Clash: Reddit Slaps Perplexity & Three Others with Lawsuit Over AI Data Theft Claims