Michael Prime claims that the FBI destroyed his hard drive containing the key to over 3,400 BTC – today worth $345 million. The appeals court just ruled: it doesn’t matter. No compensation, no consequences for the government. Why did the FBI wipe out a drive containing a fortune in BTC?
Bitcoin existed… or not? The FBI has doubts
Prime was convicted of identity theft and illegal possession of weapons, i.e. quite high-profile crimes. After his release from prison in 2022, he demanded the return of the hard drives on which he allegedly stored the cryptographic keys to his Bitcoin fortune. In his mind’s eye, Prime probably saw the scene in which he was released from prison and led a life like GTA heroes after a successful heist – the value of 3,400 BTC had already increased significantly. Problem? The FBI has already cleared the media according to standard procedure.
The judges on the Eleventh Circuit Court of Appeals showed no mercy.
For years, Prime denied having much bitcoin. Bitcoin didn’t even appear on the list when he demanded the return of his assets after his release from prison
– they wrote in their justification. Only later, as the judges noted, did Prime declare himself a “Bitcoin tycoon.”
Mathematics that doesn’t work this time
In 2020, in a financial statement to the government, Prime stated that he had Bitcoins worth… between $200 and $1,500 (liar). He later claimed it was his “only remaining fortune.” Years later, he tried to explain that it was about value single bitcoin at that time.
“We don’t buy it,” the judges replied, adding that such a valuation is “absurd” because in February 2020 BTC cost over USD 10,000.
The court found that Prime’s delay in filing claims was unreasonable and closed the way to a lawsuit.
Even if bitcoins existed – and that’s a big deal If – it would be unfair to award Prime damages
– the judges ruled.
Blockchain doesn’t forget, but keys disappear (and not because of the FBI)
This is another example showing how fragile the security of cryptocurrencies based on self-storage is. The cryptographic key is the only way to access BTC on a physical medium – without it, the funds disappear forever. A great confirmation of this is the situation of British programmer James Howells, who since 2013 has been looking for his disk containing 7,500 BTC in the trash.
According to Glassnode, approximately 1.46 million BTC (almost 7% of the total supply of 21 million coins) is likely lost forever. Chainalysis estimated in 2018 that this number could be as high as 3.7 million BTC – over 17.5% of all bitcoins.
The FBI will not be punished. Prime won’t see his millions. And blockchain? He sits quietly, writing everything down for eternity.
