Ripple CTO Emeritus David Schwartz has sharply criticized a sweeping New York lawsuit that seeks control of tens of thousands of dormant Bitcoin addresses — including wallets tied to Satoshi Nakamoto and the notorious Mt. Gox theft.
What the suit asks for
- A plaintiff using the pseudonym “Noah Doe,” together with two Wyoming entities identified in the filing as ABC Company and XYZ Company, asked the New York Supreme Court to transfer ownership of 39,069 inactive Bitcoin wallets.
- The declaration claims those addresses together hold nearly 3.7 million BTC — roughly $286 billion at current prices — and runs to some 901 pages.
- Plaintiffs argue the wallets are “abandoned property” under New York law because the original owners allegedly cannot access the funds due to a supposed technical flaw. The filing also says the addresses were reported to the NYPD and likens the coins to unclaimed bank assets or lost property.
- Notably, the list reportedly includes addresses long-associated with Satoshi and the “1Feex” wallet, which investigators and researchers have tied to funds stolen in the Mt. Gox breach.
Schwartz’s objections
Posting on X (formerly Twitter) on May 28, Schwartz attacked the suit’s legal foundation and its attempt to assert New York jurisdiction over a decentralized network of unknown owners. He singled out the plaintiffs’ jurisdictional claim that “the found property that is the subject of this suit is situated here,” calling that argument “comically bad” and fundamentally flawed.
Beyond legal theory, Schwartz warned of practical dangers: if a court issued a favorable ruling before the case was fully contested, exchanges or custodians could be pressured to freeze coins that touch U.S.-based platforms under the court order. Even if the ruling were later overturned for lack of jurisdiction, procedural hurdles could leave affected owners without an easy path to recovery. Schwartz warned this chain of events could, in effect, result in plaintiffs “wind[ing] up stealing people’s crypto.”
He urged industry participants and anyone potentially affected to monitor the case closely before it progresses through the courts.
Broader context
Schwartz has recently been active in public policy and technical debates around crypto, including a recent debate with tax expert Clinton Donnelly over how staking-style rewards on the XRP Ledger should be taxed — arguing protocol-created rewards shouldn’t be treated as taxable income until sold. He has also weighed in on proposed XRPL governance and upgrade proposals.
This New York lawsuit is not the only recent flashpoint over dormant or Satoshi-linked coins. Earlier this year, LayerTwo Labs CEO Paul Sztorc drew criticism for discussing a Bitcoin hard-fork idea that some feared could imperil Satoshi’s estimated holdings; Sztorc later disavowed any plan to seize those coins.
Why it matters
If courts accept the plaintiffs’ theory, the case could set a precedent allowing domestic courts to claim ownership over — or at least freeze — dormant crypto held in addresses with no identifiable on-chain owner. That would have significant implications for custody, exchange compliance, and how the legal system treats decentralized property. For now, legal experts and industry watchers will be looking closely as the case unfolds.
Read more AI-generated news on: undefined/news
