A U.S. appeals court has cleared the FBI of responsibility after agents erased a hard drive that allegedly held more than 3,400 Bitcoin. The court ruled that the convicted owner, Michael Prime, had repeatedly denied owning the crypto, making his later claims invalid.
Appeals Court Rejects $345M Bitcoin Claim
A three-judge panel at the Eleventh Circuit Court of Appeals ruled that the FBI cannot be blamed for erasing a hard drive that supposedly stored over 3,443 Bitcoin—worth roughly $345 million at today’s prices.
The case stemmed from Michael Prime’s lawsuit against the U.S. government, where he argued that the bureau wrongfully wiped his storage device during evidence handling. However, the court found that Prime had previously denied owning such an amount of crypto, undermining his claim.
Years of Denial Come Back to Haunt Prime
In its written opinion, the panel highlighted that Prime had “for years denied owning much Bitcoin at all.” When listing assets for recovery after his prison release in 2022, Bitcoin wasn’t included, the judges noted.
Prime only later claimed to be a “Bitcoin tycoon,” saying the wiped hard drive contained the keys to his massive fortune. The court, however, found his statements inconsistent and ruled his delayed claims unreasonable. “Even if the Bitcoin existed—and that’s a big if—awarding Prime an equitable remedy here would be inequitable,” the judges wrote.
Reported Ownership Contradictions
Court documents revealed that Prime had drastically altered his story over time. Before accepting a plea deal in 2019 on charges of device fraud, identity theft, and firearm possession, he said he owned around 3,500 Bitcoin.
But by early 2020, his financial disclosure to the government listed only $200 to $1,500 in Bitcoin, later calling it his “only remaining asset.” The appeals court deemed this evidence critical in rejecting his lawsuit.
Judges Dismiss “Preposterous” Explanation
Prime tried to justify the lower reported value by claiming that the $200–$1,500 figure referred to Bitcoin’s price per coin at that time, not the total he owned. The court rejected the explanation outright, noting that Bitcoin traded above $10,000 during February 2020.
“We don’t buy it,” the judges stated, calling the argument “preposterous.” They upheld the lower court’s decision that Prime’s claims lacked credibility and legal basis.
Lost Keys, Lost Bitcoin
The ruling also sheds light on the permanence of losing Bitcoin keys. Without the cryptographic key, digital coins on physical devices are irretrievable—something the court subtly emphasized while dismissing Prime’s lawsuit.
Blockchain analytics firm Glassnode estimates about 1.46 million BTC—nearly 7% of total supply—are permanently lost. Chainalysis placed that figure even higher in 2018, suggesting that as many as 3.7 million BTC (over 17.5% of supply) could be gone forever.