Judge bars nine alleged fraud victims from contesting 127,271 Bitcoin forfeiture

Judge Rachel P. Kovner ruled on Sept. 25 that nine alleged fraud victims lacked Article III standing to contest the forfeiture of approximately 127,271 Bitcoin. Kovner struck the timely claims of Ath Leepinyo and Connie Wilson. Kovner denied seven other claimants permission to file late. The claimants' filings did not plausibly connect their lost funds to the seized wallets. The case began with a civil forfeiture complaint filed on Oct. 14, 2025. The Department of Justice said then that the Bitcoin was in US custody and alleged links to fraud and money laundering involving Cambodian conglomerate Prince Holding Group and its chairman, Chen Zhi. The court found that the claimants' plausible allegations established, at most, that they were general unsecured creditors without a qualifying interest in the seized Bitcoin. The order recognized that a constructive trust could give a claimant an equitable ownership interest and standing. However, none of the claimants plausibly alleged the necessary connection between their funds and the seized Bitcoin. Claimant Lawrence D. Van Dyn Hoven cited an investigator's belief that his stolen cryptocurrency was part of the seizure. Kovner found that Van Dyn Hoven's filings offered no supporting facts for that belief. Kovner pointed to victim remission as a potential recovery route if the government wins forfeiture. Remission allows eligible victims to petition the Department of Justice for recovery from forfeited property without a present ownership interest in it. Under 28 CFR 9.8, petitioners must document a specific financial loss directly caused by the underlying or a related offense and meet other eligibility conditions. Petitioners must not have knowingly participated in or benefited from the offense or been willfully blind to it. Petitioners must also show that they have not been compensated and lack reasonably available alternative assets for recovery. Recognized victims may receive proportionate shares if the forfeited property cannot cover all petitions. Remission is capped at a victim's share of the associated net forfeiture proceeds. The nine claimants' potential recovery depends on the government's success in the forfeiture action and a separate discretionary decision on a documented-loss petition.