A defendant named in New York's lawsuit over dormant Bitcoin wallets filed a motion to dismiss the case, according to Cointelegraph. The state claims ownership of 39,069 wallets holding approximately $229 billion in Bitcoin, treating them as unclaimed property under its escheat laws. The defendant's filing contests whether New York courts can exercise jurisdiction over decentralized digital assets at all.
The lawsuit hinges on whether dormant crypto holdings fall under state escheat statutes, which historically apply to bank accounts, stock, and insurance payouts that go unclaimed for a set period. New York has argued that Bitcoin wallets fit this framework. The defendant's challenge goes to a jurisdictional foundation: if the asset exists on a decentralized ledger rather than in a custodian's vault or registry, can a state legally claim it?
This is one of the first significant procedural tests of how U.S. courts will handle state claims to crypto. The motion to dismiss—a standard legal tool that contests the court's authority to hear the case before reaching the merits—forces the state to justify its reach over chain-based assets. The defendant's arguments will likely center on the borderless nature of blockchain and the absence of a clear in-state nexus for wallet ownership.
The state has not yet filed its response, leaving the timeline for a judicial decision unclear. If the motion succeeds, New York's claim collapses without trial. If it fails, the case moves to discovery and the substantive question of whether abandoned crypto truly qualifies as New York property. That distinction carries weight beyond this single lawsuit: it signals whether states can use escheat law as a tool to reclaim dormant digital assets, or whether crypto's technical structure puts it outside their reach.
The dormant wallet figure itself warrants scrutiny. Whether those 39,069 addresses are truly abandoned, lost through forgotten passwords, or simply inactive long-term holdings is not addressed in the state's complaint. The defendant's filing may probe this distinction as well, since false abandonment claims could undermine New York's legal standing.