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The Eleventh Circuit Court of Appeals has rejected a lawsuit by convicted identity thief Michael Prime over an alleged loss of 3,443 Bitcoin, which he valued at about $345 million. The three-judge panel ruled that Prime cannot hold federal authorities responsible for wiping an external hard drive he now claims stored the cryptographic key to the Bitcoin.
The court affirmed a lower court decision and held that equity does not support any remedy in Prime’s favor. The judges also stressed that Prime’s changing stories and long delay in asserting his Bitcoin claim undermined his case.
Prime asked the court to order the return of an orange external hard drive that federal agents seized during his 2019 arrest for counterfeiting, identity theft, and related offenses. He claimed years later that the drive held the key to approximately 3,443 BTC, which he now says the government destroyed.
The Eleventh Circuit noted that Prime did not assert ownership of such a large Bitcoin balance for more than three years. During that time, he filed financial disclosures, spoke with a probation officer, and appeared at sentencing without mentioning any major Bitcoin holdings. In those records, he reported owning between $200 and $1,500 in Bitcoin.
Judge Britt Grant wrote that Prime “changed his tune” after the plea agreement. At sentencing, his own attorney acknowledged that the evidence did not support the earlier suggestion that Prime controlled thousands of Bitcoin. The defense described only modest mining-related holdings and assets the government had already seized, such as vehicles and boats.
The court relied on the doctrine of laches, which bars claims when a party waits too long to act and causes unfair prejudice. The panel found that Prime not only delayed his claim but also repeatedly denied owning significant cryptocurrency.
The court emphasized that the government followed standard procedures when it wiped seized devices, including the hard drive in question, after giving notice and seeing no valid claim. The judges stated that authorities would not have destroyed the drive if they had any reason to believe it held hundreds of millions of dollars in Bitcoin.
Prime later tried to explain his low Bitcoin disclosure by saying he meant to describe the price range of a single coin. The panel rejected that explanation and called it “preposterous,” noting that Bitcoin price in early 2020 far exceeded that range.
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The ruling confirms that Michael Prime cannot sue the federal government for the alleged $345 million loss tied to the wiped hard drive. The judges wrote that even if the Bitcoin holdings existed, forcing the government to provide replacement BTC would be inequitable.
The case also highlights broader risks for cryptocurrency users. Access to Bitcoin depends on cryptographic keys stored in wallets or on devices. If those keys are lost, destroyed, or never disclosed in time, courts may offer no recovery, even when the claimed sums are enormous.
