{"id":567683,"date":"2026-10-01T07:30:21","date_gmt":"2026-10-01T06:30:21","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=567683"},"modified":"2026-09-30T20:24:41","modified_gmt":"2026-09-30T19:24:41","slug":"us-court-blocks-victims-from-127000-seized-bitcoin-and-petition-rules-are-blamed","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/us-court-blocks-victims-from-127000-seized-bitcoin-and-petition-rules-are-blamed\/","title":{"rendered":"US court blocks victims from 127,000 seized Bitcoin, and petition rules are blamed"},"content":{"rendered":"

Judge Rachel P. Kovner rejected claims by nine alleged fraud victims seeking to contest forfeiture of approximately 127,271 Bitcoin in a Sept. 25 order.<\/p>\n

Their filings did not plausibly connect their lost funds to the specific seized wallets, leaving them with a different potential recovery route if the government wins the forfeiture case.<\/p>\n

The Eastern District of New York judge struck the timely claims<\/a> of Ath Leepinyo and Connie Wilson and denied seven other claimants permission to file late. All nine lacked Article III standing, the legal threshold for contesting the action.<\/p>\n

The case began with a civil forfeiture complaint filed on Oct. 14, 2025. DOJ said then<\/a> that the Bitcoin was in US custody and alleged links to fraud and money laundering involving Prince Holding Group, a Cambodian conglomerate, and its chairman, Chen Zhi.<\/p>\n

The court treated these claimants\u2019 plausible allegations as establishing, at most, the position of general unsecured creditors: people seeking compensation without a qualifying interest in the particular assets being forfeited.<\/p>\n

A loss tied to an alleged fraud did not establish ownership of coins in these wallets.<\/p>\n

The order recognized that a constructive trust could give a claimant an equitable ownership interest and standing. That remedy can recognize an interest in property derived from a person\u2019s assets. However, here none of the claimants plausibly alleged the necessary connection between their funds and the seized Bitcoin.<\/p>\n

Lawrence D. Van Dyn Hoven, for example, relied on an investigator\u2019s belief that his stolen cryptocurrency was part of the seizure. Kovner found that his filings offered no supporting facts explaining that belief.<\/p>\n

\"Comparison<\/a>
A Sept. 25 ruling rejected nine claims to seized Bitcoin but did not finalize forfeiture or transfer assets to a reserve.<\/figcaption><\/figure>\n

What remission could provide<\/h2>\n

Kovner pointed to victim remission if the government succeeds in forfeiting the Bitcoin. That process allows eligible victims to petition DOJ for recovery from forfeited property even when they lack a present ownership interest in it.<\/p>\n\n

\n \n
\n Related Reading<\/span>\n

US targets $26.4 million in five crypto scam cases as DOJ says $800 million recovered<\/h3>\n <\/div>\n \n <\/i>\n <\/span>\n <\/a>\n<\/div>\n\n

Under 28 CFR 9.8<\/a>, petitioners must document a specific financial loss directly caused by the offense underlying forfeiture or a related offense, and satisfy other eligibility conditions. Other conditions include no knowing participation in or benefit from the offense, and no willful blindness.<\/p>\n

Petitioners must also show they have not been compensated for the loss and lack reasonably available alternative assets for recovery.<\/p>\n

When the forfeited property cannot cover petitions in full, recognized victims may receive proportionate shares. Remission is capped at a victim\u2019s share of the associated net forfeiture proceeds, so the size of the Bitcoin seizure<\/a> is no promise of full repayment.<\/p>\n

The Sept. 25 order resolves these nine claimants\u2019 standing. Their potential recovery depends on government success in the forfeiture action and a separate discretionary decision on a documented-loss petition.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Sept. 25 order found no plausible link to the seized wallets; any DOJ remission depends on forfeiture and a discretionary decision.<\/p>\n","protected":false},"author":1264,"featured_media":567708,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[76799,77968,60793,29],"tags":[81073,76769],"post_folder":[],"acf":[],"yoast_head":"\nUS court blocks victims from 127,000 seized Bitcoin, and petition rules are blamed<\/title>\n<meta name=\"description\" content=\"A federal judge rejected nine victims\u2019 claims to 127,271 seized Bitcoin, leaving DOJ remission as their potential recovery path.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cryptoslate.com\/us-court-blocks-victims-from-127000-seized-bitcoin-and-petition-rules-are-blamed\/\" \/>\n<meta property=\"og:locale\" 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