Ripple CTO Schwartz Calls $293B Bitcoin Lawsuit "Comically Bad"
In brief
- Ripple CTO David Schwartz dismissed a $293 billion lawsuit targeting 39,069 dormant Bitcoin wallets as legally flawed.
- Anonymous plaintiff filed suit seeking ownership of Bitcoin wallets inactive for at least five years under New York law.
- Schwartz argued the court lacks jurisdiction and Bitcoin network would unlikely comply with any judicial order.
- Galaxy Research expressed skepticism about applying local lost-and-found statutes to globally distributed cryptocurrency.
Schwartz's Critique
Schwartz identified multiple significant legal problems with the suit, particularly the question of jurisdiction. "The logic that the property was found in the state of NY is comically bad," Schwartz said, highlighting what he views as a fundamental misapplication of geographic law to globally distributed digital assets. He also noted that the Bitcoin network would be very unlikely to comply with a court order to transfer the wallets, since no central authority controls the blockchain.
The lawsuit hinges on New York's lost-and-found statutes, which traditionally apply to physical property abandoned within state borders. The suit targets self-custodied Bitcoin wallets that have shown no on-chain activity for at least five years, with the dormant holdings valued at roughly $293 billion at current prices.
Plaintiff's Response and Enforcement Questions
The plaintiff's legal strategy rests on the argument that dormant wallets constitute abandoned property subject to state escheat laws. While Schwartz's criticism has been sharp, the lawsuit raises a novel question: whether traditional property law can apply to cryptocurrency. Some legal scholars have noted that if a court ruled in the plaintiff's favor, enforcement mechanisms might extend beyond direct blockchain transfers. A court could theoretically order custodians or exchanges to facilitate transfers, though such an order would face significant practical and constitutional hurdles.
More than 400 wallet owners moved their funds in response to abandonment notices, indicating the suit has already prompted some action. However, well over 39,000 wallets remained silent, suggesting most holders either missed the notices or view the lawsuit as lacking merit.
Industry Skepticism
Galaxy Research Head Alex Thorn expressed skepticism about using local lost-and-found statutes to claim globally distributed Bitcoin holdings, echoing Schwartz's concerns. The broader crypto industry has largely dismissed the suit as legally unprecedented and unlikely to succeed, though the case may test the boundaries of how traditional property law applies to decentralized digital assets.
