Court Rules FBI Not Liable For Deleting Hard Drive Containing $345M in BTC
Michael Prime, a man from Florida who has been found guilty of many federal crimes, was arrested in 2019 for crimes like access-device fraud, aggravated identity theft, and having a gun without a license. During the inquiry, the FBI took many devices, including an orange external hard drive that Prime later said included the Secret keys to 3,443 .
BTC was worth less than $10,000 at the time, but the stash’s value grew when the price of BTC rose to $100,000 per coin in 2025. That year, Prime admitted guilt and presented official financial accounts, saying that his only surviving assets were between $200 and $1,500 in BTC.
He didn’t say anything about the hard disk or any large amounts of BTC. later than the case was decided, investigators treated the seized gadget like normal evidence and wiped it clean, following standard FBI protocol.
The Appeals Court’s Decision and Reasoning
Prime’s legal battle begined later than he got out of prison in 2022 and claimed to own millions of dollars in missing BTC. He then asked for payment. Judges Jill Pryor, Britt Grant, and Stanley Marcus in the turned down Prime’s claim.
They pointed out that he had been lying about his crypto assets for years and had been denying them. The court said that the government had relied on Prime’s own admissions when it got rid of the evidence, using the legal principle of laches, which says that inordinate delay precludes claims.
Prime said that people misunderstood what he had said before, saying that he meant the worth of each , not the overall amount he had. The judges threw this out as “ridiculous,” pointing to evident discrepancies and the currency’s price history at the time in question.
FBI Procedures: Protecting Privacy, Not Portfolios
The ruling made it clear that the followed normal rules for privacy and evidence when they wiped the hard disk. Once deleted, BTC’s cryptographic keys cannot be found again. According to industry estimates, up to 17% of the entire BTC supply may be permanently lost due to misplaced keys, and this now includes Prime’s coins.
The court stated that even if the BTCs were true, Prime didn’t have to pay because they had previously denied it and didn’t inform anyone. The courts have made it clear that the primary role of law enforcement is to protect people’s privacy, not to secureguard assets for those who conceal them.
Wider Effects on Crypto Holders
This sends a strong message to those who own cryptocurrencies: they must be honest and transparent during judicial processes. If you don’t honestly tell people about your digital assets, you could lose a lot of money.
In Prime’s case, the court said that the owner’s silence, not the FBI’s actions, caused the loss. The verdict establishes a standard for handling confiscated digital assets and demonstrates how crypto ownership actually works: if you don’t possess the , you will lose your coins permanently.
