The U.S. Court of Appeals for the Eleventh Circuit has upheld a lower court ruling that dismissed Michael Prime’s $364 million bitcoin compensation claim against the federal government. The case drew attention because it centered on an alleged cache of 3,443 BTC supposedly tied to a destroyed storage device.
The claim centered on a destroyed hard drive
According to the court record, Prime, who was convicted in 2019 on counterfeiting, identity theft, and firearm-related charges, argued that federal agents destroyed an orange external hard drive seized during the investigation. He claimed the device contained private keys needed to access thousands of bitcoin. At the reported market price of $105,749 per BTC, the alleged holdings would be worth about $364 million.
That argument failed in both lower and appellate courts. The U.S. District Court for the Middle District of Florida had already found that the hard drive was lawfully destroyed under standard evidence disposal procedures, and therefore denied compensation. Prime then appealed, but the Eleventh Circuit affirmed the earlier judgment.
Why the court rejected the case
The appellate panel said that even if the bitcoin existed, awarding equitable relief would still be inappropriate. A central issue was delay: Prime waited years before asserting ownership and asking for the return of the device. The court held that his claim was barred by laches, a doctrine that can defeat claims brought too late when the delay unfairly prejudices the other side.
The judges also pointed to repeated inconsistencies in Prime’s statements about ownership of the cryptocurrency. In the court’s view, those contradictions, combined with his long silence, undermined the credibility of the claim and left the government at a clear disadvantage in responding to it.
Case background and implications
Investigators had previously uncovered counterfeit credit cards, forged identification documents, and electronic devices linking Prime to a broader fraud operation. The Eleventh Circuit noted that he sought return of the seized drive more than four years later, alleging that it held the cryptographic keys for nearly 3,443 bitcoin.
By the time he tried to recover the drive, however, it had already been destroyed under routine evidence procedures, eliminating any practical possibility of recovering the alleged assets. With the appellate court now affirming the dismissal, one of the largest bitcoin compensation claims against the U.S. government has effectively come to an end, highlighting how critical timing and credible proof are in legal disputes involving digital assets.