The Digital Chamber filed an amicus brief in New York court opposing the state's effort to seize 39,069 dormant Bitcoin wallets, marking a direct clash over whether state law can reach assets held in self-custody.
New York's lawsuit claims the state can claim ownership of the wallets under escheatment law, which allows governments to take custody of abandoned property. The Digital Chamber argues this application misreads both the law and the nature of blockchain assets. The brief contends that self-custody wallets, where individuals hold private keys without a custodian or intermediary, fall outside the legal framework states designed to govern traditional unclaimed property held by banks or brokers.
The distinction matters. If New York succeeds, any state could attempt similar claims over dormant crypto wallets within its borders, regardless of whether the wallet owner ever signed a contract with a state institution. The regulatory risk is not hypothetical: state governments hold broad statutory authority over property law, and a court ruling favoring New York would create a model other states could follow.
The Digital Chamber represents exchanges, infrastructure firms, and investors. Its brief does not reveal the specific legal arguments it mounted, but the core objection is structural: escheatment statutes assume custody by a regulated entity (a bank, brokerage, or insurance company). A self-custody wallet has no custodian. Applying the law to private keys held offline or in a self-managed digital wallet would require courts to interpret "property" and "holder" in ways those statutes never intended.
New York's approach also sidesteps questions of proof. Determining whether a wallet is truly dormant or abandoned requires knowing the owner's intent, which blockchain records cannot provide. Traditional escheatment relies on registered ownership, mailing addresses, and institutional records. Bitcoin's pseudonymity breaks that chain.
The case remains unresolved, and the court has not yet ruled on whether to dismiss. The brief signals that the crypto industry is mounting a coordinated legal defense, but it does not eliminate the underlying risk. Even a preliminary ruling against New York would not prevent similar lawsuits elsewhere, and a ruling in New York's favor could catalyze enforcement actions across multiple jurisdictions. Regulatory clarity on whether state property law applies to self-custody assets remains absent at both state and federal level.