A federal judge in the Eastern District of New York has rejected claims by nine alleged fraud victims seeking to contest the forfeiture of approximately 127,271 Bitcoin seized by authorities.
On September 25, Judge Rachel P. Kovner struck two timely claims and denied seven other claimants permission to file late. The judge ruled that all nine lacked Article III standing—the legal threshold required to contest the forfeiture action.
The central issue was that the claimants failed to plausibly establish a direct connection between their lost funds and the specific seized wallets, according to the ruling. The court treated their allegations as positioning them as general unsecured creditors rather than owners of the seized assets.
Standing and Legal Requirements
The judge acknowledged that a constructive trust could theoretically give a claimant an equitable ownership interest and standing to contest forfeiture. Such a remedy can recognize an interest in property derived from a person's assets. However, the court found that none of the nine claimants plausibly alleged the necessary connection between their funds and the Bitcoin in question.
In one example, claimant Lawrence D. Van Dyn Hoven relied on an investigator's belief that his stolen cryptocurrency was part of the seizure, but the court found his filings offered no supporting facts to substantiate that belief.
Remission as an Alternative Recovery Path
Judge Kovner pointed to victim remission as a potential recovery avenue for the claimants if the government succeeds in forfeiting the Bitcoin. This process allows eligible victims to petition the Department of Justice for recovery from forfeited property even when they lack a present ownership interest in it.
To qualify for remission under federal regulations, petitioners must document a specific financial loss directly caused by the offense underlying the forfeiture or a related offense. Additional eligibility conditions include no knowing participation in or benefit from the offense, and no willful blindness toward criminal activity.
Petitioners must also demonstrate they have not been compensated for the loss and lack reasonably available alternative assets for recovery.
Recovery Limits
When forfeited property cannot cover all petitions in full, recognized victims may receive proportionate shares. Remission is capped at a victim's share of the associated net forfeiture proceeds, meaning the size of the Bitcoin seizure does not guarantee full repayment.
The September 25 order resolves the nine claimants' standing in the case. Their potential recovery depends on government success in the forfeiture action and a separate discretionary decision on a documented-loss petition.
The case began with a civil forfeiture complaint filed on October 14, 2025, in which the Department of Justice alleged the Bitcoin was linked to fraud and money laundering involving Prince Holding Group, a Cambodian conglomerate, and its chairman, Chen Zhi.
