A lawsuit seeks ownership of nearly 3.8 million dormant Bitcoin using lost-property laws, while a new Congressional bill aims to prevent self-custodied crypto from being claimed as abandoned due to inactivity
A high-stakes legal battle is unfolding over the fate of nearly 3.8 million dormant Bitcoin, as a lawsuit attempts to claim ownership of thousands of inactive addresses under state lost-property laws. At the same time, U.S. lawmakers are racing to finalize the CLARITY Act, a federal bill designed to prevent self-custodied digital assets from being treated as abandoned simply because their owners have not moved them for years.
The lawsuit, filed by Noah Doe and two companies, leverages New York's lost-property statutes-typically used for physical items handed to police-to argue that 39,069 Bitcoin addresses holding approximately 3.799 million BTC should be considered abandoned. The plaintiffs cite a campaign of blockchain-based OP_RETURN notices, public announcements, and a claim window as evidence that the coins are "lost property" with no owner stepping forward. Their legal theory relies heavily on the fact that these wallets have remained untouched for extended periods, with no activity or communication from the original owners.
Federal Preemption
Section 20216 of the latest CLARITY Act draft directly targets this approach. The provision states that a self-custodied digital asset-defined as one where the owner controls the private keys without relying on an exchange or custodian-cannot be deemed abandoned, unclaimed, or forfeited solely due to inactivity. This language would override state and local laws that currently allow for the transfer of ownership based on wallet dormancy alone, creating a federal shield for self-custodied crypto assets.
The distinction is critical: while the proposed federal law would protect assets held in self-hosted wallets, it would leave coins stored with custodians, exchanges, or brokers subject to existing state unclaimed-property rules. This means that only users who control their own private keys would benefit from the new protections, while custodial holdings could still be at risk if left inactive for years.
Legal and Market Implications
The outcome of this legal and legislative clash could have far-reaching consequences for Bitcoin holders, especially those who have chosen to self-custody their assets for long-term storage. If the CLARITY Act passes with its current language intact, claimants would no longer be able to argue that years of silence alone justify taking title to dormant Bitcoin addresses. Instead, they would need to provide additional evidence beyond inactivity-such as proof of owner abandonment or other qualifying circumstances.
However, the bill's fate remains uncertain. If Senate negotiators weaken or remove Section 20216, courts could still weigh inactivity alongside other factors when deciding ownership claims. This would leave the door open for future lawsuits similar to the one brought by Noah Doe, especially in states with aggressive unclaimed-property regimes.
Numbers and Context
According to blockchain data, the 3.799 million BTC targeted in the lawsuit represent nearly 18% of Bitcoin's total supply, a figure that underscores the scale of dormant assets in the ecosystem. As of July 2026, Bitcoin's circulating supply is approximately 19.5 million BTC, with a maximum supply capped at 21 million. Dormant addresses-wallets that have not moved coins for years-are a well-documented phenomenon, often attributed to lost keys, deceased owners, or long-term holders. The legal status of these coins has remained ambiguous, with state laws and federal proposals now coming into direct conflict.
For U.S. users, the distinction between self-custody and custodial holdings is more than technical-it determines whether their assets could be subject to future claims under state law. The CLARITY Act's preemption language, if enacted, would provide unprecedented legal certainty for those holding their own keys, while leaving custodial users exposed to existing state-level risks.
In the broader context of cryptocurrency regulation, the debate over dormant assets highlights the ongoing tension between state property laws and the unique characteristics of blockchain-based ownership. Unlike traditional assets, Bitcoin and other cryptocurrencies can remain untouched for years without clear evidence of abandonment, making legal definitions of "lost" or "unclaimed" property especially challenging. As lawmakers and courts grapple with these questions, the outcome will shape the rights and responsibilities of digital asset holders for years to come.
