A judge has ruled that the government agency didn’t illegal destroy a criminal’s crypto
A US appeals court has ruled that the FBI acted within its rights when it wiped a hard drive that allegedly contained over 3,400 Bitcoin, now worth about $345 million. The decision ends a long legal battle brought by Michael Prime, a convicted identity thief who claimed the digital assets were his and that the government destroyed them illegally. The Eleventh Circuit Court of Appeals said Prime had repeatedly denied owning the Bitcoin in earlier proceedings, leaving him no legal ground to demand compensation.
Prime’s troubles began years earlier when federal agents seized his electronics during an investigation into fraud and firearm offenses. After serving his prison sentence, he asked for the return of a hard drive he said contained the private key to his cryptocurrency.
By then, the FBI had erased the data, citing its standard policy for handling confiscated equipment. Prime argued the move violated his rights, but judges disagreed, ruling that his own inconsistent statements undermined his case.
Court documents show that Prime initially claimed to own roughly 3,500 Bitcoin before entering a plea deal in 2019. Later, in financial disclosures, he listed his holdings as just $200 to $1,500 worth of Bitcoin.
When questioned, he said the figures represented the per-coin value rather than his total holdings—a claim the judges dismissed as “preposterous,” noting Bitcoin’s actual market price was above $10,000 at the time.
The court said even if the Bitcoin had existed, Prime’s years-long delay in claiming it made his lawsuit invalid. The ruling also emphasized that granting compensation would be “inequitable,” given the lack of credible evidence that the assets were real.
Losing a cryptographic key means permanent loss of access to any Bitcoin tied to it. Analysts estimate millions of Bitcoin— possibly up to 17% of the total supply—are already lost forever. For Prime, that figure now includes the fortune he says vanished with his wiped hard drive.
