The U.S. Court of Appeals for the Eleventh Circuit has rejected a Florida man's claim that the government owes him 3,443 Bitcoin (BTC), worth more than $345 million, after law enforcement destroyed a hard drive allegedly containing his private keys .
The case of United States v. Michael Prime (No. 23-13776) is about a convicted counterfeiter who denied owning Bitcoin for years, only to later insist he was a millionaire when it was too late.
Related: What is Crypto? Cryptocurrency explained
A private key is like a secret password that lets you unlock and spend your crypto.
If you lose it, you lose access to your coins forever; there's no way to reset or recover them.
The rise and fall of Michael Prime
Michael Prime was arrested in 2019 on charges of counterfeiting, identity theft, and illegal firearm possession. When police entered his home in Hillsborough County, Florida, they found what the court called "piles of evidence."
"Fake credit cards, fake driver's licenses, laptops, and the like," the court said.
Investigators seized a trove of electronic devices containing stolen financial data and evidence of online sales of counterfeit goods. Prime admitted to producing fake IDs, selling untraceable firearms, and receiving Bitcoin payments for his work.
At one point, he told agents he held "approximately 3,500 Bitcoin," which he said he had earned or mined years earlier. However, federal investigators were unable to find any crypto during multiple searches, reporting that "no cryptocurrency, private keys or recovery seeds were found."
Prime pleaded guilty in 2019 to access device fraud and other charges, agreeing to fully disclose all assets he controlled. But in a series of official disclosures that followed, he downplayed his Bitcoin holdings.
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In February 2020, he filed a financial statement reporting only $200 to $1,500 in Bitcoin, then told the probation office that $1,500 in Bitcoin was "his only remaining asset."
His own lawyer later told the sentencing court that Prime's earlier claim to large Bitcoin holdings "was not supported by the evidence," adding that the coins "don't exist other than what [Prime] had from his mining days in Seattle back almost ten years ago."
Prime was sentenced to 65 months in prison and released to a halfway house in 2022.
The $345 million claim
Once free, Prime asked the government to return his seized electronics.
The Secret Service notified him that some devices could be wiped and returned if he provided passwords, but Prime instead filed a lawsuit. Initially, his motion mentioned "boats and cars," but not Bitcoin or any hard drive.
Only later did he claim that an "orange external hard drive" contained the cryptographic keys to 3,443 Bitcoin. By that time, the device, like others seized in the investigation, had already been destroyed.
Prime then sued the U.S. government, demanding the Bitcoin's full value, arguing that the destruction deprived him of access to his digital fortune.
Related: Columbia B-school professor links crypto's latest crash to 'get rich quick scheme'
The court's ruling: Too little, too late
The Eleventh Circuit was not convinced. Judge Elizabeth Grant in the court ruling said that the court found that Prime's delay and denials barred his claim under the doctrine of laches, which prevents recovery when a claimant unreasonably delays and causes prejudice to the opposing party.
The court noted:
"For years, Prime denied that he had much bitcoin at all. And bitcoin was not on the list when he sought to recover missing assets after his release from prison. Only later did Prime claim to be a bitcoin tycoon. By then it was too late."
Judge Grant wrote that the government "would not have destroyed the hard drive if it had thought that it contained millions of dollars in bitcoin," and that officials acted properly based on the information available at the time.
"All that to say, Prime waited more than three years after his plea to raise any claim at all about the bitcoin he now says was on his hard drive. And in the meantime, he and his attorney repeatedly disclaimed its existence. That is textbook delay."
The court concluded that awarding him compensation would be "inequitable," affirming the district court's finding that laches barred his claim.
With Bitcoin trading above $100,000, Prime's alleged holdings would be worth roughly $345 million.
This story was originally reported by TheStreet on Nov 6, 2025, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.
