The man's hard drive storing the Private Key was formatted, resulting in the permanent loss of over 3,000 Bitcoins······

In the wave of digital assets, the accumulation and loss of wealth can sometimes be just a thought away. Imagine a lottery ticket worth hundreds of millions of dollars being accidentally thrown into a shredder; how heartbreaking would that be? Now, replace this scenario with a hard drive storing a huge amount of Bitcoin Private Keys, and the one destroying it is none other than the national law enforcement agency—the Federal Bureau of Investigation (FBI).

Doesn't this sound like an absurd tragedy? This is the true experience of Michael Prime, a man from Florida. He claims that a hard drive seized and formatted by the FBI contains the Private Keys to over 3,400 Bitcoins, which is worth more than $350 million at current value. However, when he filed a lawsuit in court, trying to recover this astronomical loss, the U.S. Court of Appeals for the Eleventh Circuit made a final ruling on November 4, 2025: denying his request and stating that the government is not required to compensate.

How did a mistake worth over $350 million occur? Why did the court make such a seemingly “inhumane” ruling? All of this can be traced back to Mr. Prime's erratic statements and the cold, absolute rules of the cryptocurrency world.

Case Review

The story's starting point is not about cryptocurrency, but rather an ordinary criminal case. In 2019, Prem was arrested for multiple charges including forgery, identity theft, and illegal possession of firearms. During the search by law enforcement, a hard drive was seized as evidence. At the time, it seemed to be just an inconspicuous piece of evidence in the case. However, the fate of this hard drive began to take a mysterious turn from Prem's description of his own wealth, leading to an enigmatic conclusion.

In the early stages of the investigation, Preim boasted to the agents that he held approximately 3,500 Bitcoins. This is an astonishing number, enough to place him among the Bitcoin millionaires. But dramatically, by February 2020, when he reached a plea agreement with the prosecution and was required to submit formal financial disclosure documents, his claims underwent a 180-degree turn. In the documents, he stated that the Bitcoins he held were “valued at only $200 to $1,500.”

The court later pointed out the “absurdity” of this statement in the judgment. In 2020, the price of Bitcoin had already surpassed $10,000, and Prem's claims were clearly out of touch with market reality. Whether he was considering hiding assets to seek a lighter sentence or had other unknown motives, this contradictory statement laid the most fatal groundwork for his future failure in recovering assets.

Plym was ultimately sentenced to more than five years in prison. During his incarceration, the hard drive that he had previously downplayed was formatted and destroyed by the FBI according to standard operating procedures after the case was closed. It was not until Plym was released from prison that he changed his tune, re-emerging as a “Bitcoin tycoon” and filing a lawsuit against the government, demanding compensation for the loss of 3,443 Bitcoins worth $354 million.

In the face of Prime's massive claim, the core of the court's ruling was not whether the FBI's actions “damaged” the hard drive, but rather focused on the legal consequences of Prime's own actions. The court ultimately cited an ancient and important legal principle—“Laches,” which sealed the deal.

The principle of “Delayed Effect” aims to prevent a rights holder from causing harm to the other party due to an unreasonable delay in exercising their rights. There are two conditions for the establishment of this principle: Unreasonable delay: The rights holder clearly had the opportunity but did not assert their rights for a long period of time. Damage to the other party: This delay resulted in an unfavorable change in the other party's situation, making it impossible to restore the original state.

The court believes that Plemm's case perfectly meets these two requirements. First, from the time of his arrest, trial, to confession, he had several years to provide credible evidence to the court or prosecution to prove that the hard drive contained high-value assets and request special custody. However, he did not; instead, he chose to conceal and downplay. Secondly, it was precisely because of his delays and misleading statements that the FBI regarded the hard drive as general evidence and destroyed it according to regulations after the case was closed. Now the hard drive no longer exists, and the government can no longer “return” this property. Plemm's delay directly led to the government's inability to meet the “damages” requested.

The circuit court harshly pointed out in its opinion: “For many years, Mr. Plemm has denied owning a large amount of Bitcoin… until later, he claimed to be a Bitcoin tycoon.” This sentence accurately summarizes the fundamental reason for his defeat. The law does not protect those who are “asleep” in their rights, nor does it endorse contradictory actions intended to manipulate judicial procedures. When he chose to lie at a critical moment, he effectively gave up his legal remedy to protect his property.

Private Key means ownership

The tragedy of Prem is not only a $350 million lesson in law but also profoundly reveals the core essence of the cryptocurrency world. A concept that many newcomers easily misunderstand is that Bitcoin is not “stored” on a hard drive. The Bitcoin on the blockchain exists on a decentralized public ledger. What is stored on the hard drive is the only key to access your account - the Private Key.

It's like an impregnable bank vault, where your assets are securely stored inside. The Private Key is that unique, uncopyable key. Once this key is melted down or destroyed, even if the vault and the wealth inside are still there, no one can open it anymore. Your assets will be forever sealed in that address, becoming a visible but intangible ghost data on the blockchain.

This also helps us understand the philosophical yet somewhat cold quote by Bitcoin's founder Satoshi Nakamoto: “Lost coins only make everyone else's coins worth slightly more.”

The logic behind this statement is that the total supply of Bitcoin is limited (approximately 21 million coins). When a portion of Bitcoin is permanently removed from circulation due to lost Private Keys, the total amount of Bitcoin available for trading in the market decreases. According to the law of supply and demand, the remaining circulating Bitcoin becomes more scarce, which “slightly increases” the wealth value of its holders. This is a pure mathematical reality, and no central authority can intervene or recover it.

The 3,443 Bitcoins belonging to Pleim have now joined the massive “Lost Bitcoin Club.” According to River Financial's estimate in 2025, between 2.3 million and 4 million Bitcoins have been permanently lost worldwide for various reasons, accounting for 11% to 18% of the total supply. Among the most famous cases is that of British engineer James Howells, who mistakenly discarded a hard drive containing the Private Key for 8,000 Bitcoins as trash many years ago, and is still negotiating with local authorities in the hope of excavating the landfill to search for that “digital gold” worth hundreds of millions of dollars.

expensive course

The story of Michael Plem has sounded the alarm for all digital asset holders. It brings three crucial warnings: Self-Protection Technically: In a decentralized world, “Be Your Own Bank” is not only power but also a heavy responsibility. Large assets must be stored using offline methods such as cold wallets or hardware wallets, and the mnemonic phrase must be properly backed up in multiple secure locations. The security of your assets entirely depends on your ability to manage your Private Key. Legal Integrity and Timeliness: When facing judicial procedures, it is crucial to honestly and timely state your asset status. Any attempt to conceal or deceive may lead to irreparable consequences in the future. The legal system is built on trust and evidence; taking shortcuts will ultimately backfire. Profound Awareness of Concepts: It is essential to understand the “irreversibility” of digital assets. The blockchain cannot be backtracked; once a Private Key is lost, wealth can vanish into thin air; if rights disappear due to delays, the court cannot recover them.

Plem's billions of wealth did not ultimately vanish due to the FBI's formatting orders, but rather dissipated in his own lies and delays. This is a modern fable about the intertwining of humanity, law, and technology, reminding us that while embracing the freedoms and opportunities brought by new technologies, we must also bear the inescapable personal responsibility that comes with it.