Ripple CTO Emeritus David Schwartz has criticized a New York lawsuit seeking ownership of billions of dollars worth of dormant Bitcoin wallets, including addresses linked to Satoshi Nakamoto and the Mt. Gox hack.
Summary
- Ripple CTO Emeritus David Schwartz criticized a New York lawsuit seeking control of 39,069 dormant Bitcoin wallets worth an estimated $286 billion.
- The lawsuit includes wallets linked to Satoshi Nakamoto and the “1Feex” address associated with the Mt. Gox hack, according to court filings.
- Schwartz warned that even a legally weak ruling could create problems if U.S. exchanges are asked to freeze funds from disputed wallets.
According to court filings shared online, plaintiff Noah Doe and two Wyoming-based entities identified as ABC Company and XYZ Company asked a New York court to transfer control of 39,069 inactive Bitcoin wallets that reportedly hold nearly 3.7 million BTC, valued at about $286 billion at current prices.
The filing argues the wallets qualify as abandoned property under New York law because the original owners allegedly cannot access or use the funds due to a technical flaw. Plaintiffs also claimed the addresses had been reported to the New York Police Department, comparing the dormant Bitcoin to unclaimed bank assets or lost property.
Among the wallets listed in the 901-page declaration are addresses associated with Bitcoin creator Satoshi Nakamoto. The filing also references the “1Feex” wallet, which blockchain researchers and crypto investigators have previously tied to funds stolen during the Mt. Gox breach.
In posts shared on X on May 28, Schwartz challenged the legal foundation of the case and questioned how a New York court could claim authority over Bitcoin wallets with unknown owners spread across a decentralized network.
“The most serious flaw in the suit is that jurisdiction is supposedly based on the fact that ‘the found property that is the subject of this suit is situated here,” wrote Schwartz.
Schwartz says jurisdiction argument could create enforcement issues
While dismissing the core legal argument, Schwartz warned that the lawsuit could still create practical problems for Bitcoin holders if a court issued a favorable ruling before the case faced serious opposition.
“There are many significant legal problems with the suit,” Schwartz wrote on social media. He added that the argument claiming the property was “found” in New York was “comically bad.”
At the same time, Schwartz said exchanges and custodians could still face pressure if funds from one of the disputed wallets eventually moved through a U.S.-based platform. According to Schwartz, the plaintiffs might attempt to freeze assets by arguing the Bitcoin legally belonged to them under the court order.
Even if another court later decided the ruling lacked jurisdiction, Schwartz warned procedural delays could complicate efforts to overturn the decision.
“Even though the NY ruling should be considered void ab initio due to no jurisdiction, it’s not entirely inconceivable that a US court may find that due to the passage of time, the claim that the ruling is void was procedurally defaulted,” Schwartz wrote.
He added that, under such circumstances, plaintiffs could “conceivably, wind up stealing people’s crypto.”
Near the end of the discussion, Schwartz said he hoped industry participants and affected parties were paying close attention to the case before any ruling advanced further through the legal system.
Ripple executive has recently weighed in on other crypto policy debates
Schwartz has recently taken part in several public discussions involving crypto regulation, taxation, and XRP Ledger governance.
Earlier this week, Schwartz debated crypto tax expert Clinton Donnelly over how staking rewards should be taxed if XRP Ledger ever introduced a staking-style mechanism. Although XRPL does not support native staking, Schwartz argued that rewards created directly through a protocol process should not automatically count as taxable income before they are sold.
In comments posted on X, Schwartz compared newly minted rewards to handmade property, writing that taxing them immediately would be similar to taxing “a sweater” before its creator sold it.
The Ripple executive has also commented on proposed XRP Ledger amendments and network upgrades in recent months, particularly around governance rules and technical changes affecting the ecosystem.
Meanwhile, Schwartz is not the only figure to raise concerns about attempts to target dormant Bitcoin linked to Satoshi Nakamoto.
Earlier this year, LayerTwo Labs chief executive Paul Sztorc faced criticism after discussing a Bitcoin hard fork proposal that some community members believed could put Satoshi’s estimated 1.1 million BTC at risk. Sztorc later distanced himself from any plan to seize those holdings.
