Cryptocurrency and Loan Proceeds Count as “Assets” Under 28 U.S.C. § 1915; Indigency Is Measured at Filing, Not After Self-Inflicted Depletion

I. Introduction

In Smith v. Oklahoma Attorney General's Office (10th Cir. Jan. 30, 2026) (unpublished “Order and Judgment”), the Tenth Circuit affirmed the district court’s denial of in forma pauperis (“IFP”) status to plaintiff-appellant Bobby Lee Smith, who sued the Oklahoma Attorney General’s Office and various officials and unknown defendants alleging “malicious prosecution, defamation, constitutional violations, and administrative obstruction.”

The appeal presented a recurring—but increasingly modern—question about IFP practice under 28 U.S.C. § 1915: when an applicant holds substantial value in non-traditional financial vehicles (here, cryptocurrency and app-based accounts), and where those funds are described as “borrowed,” must courts treat them as “assets” in determining indigency? A second, practical issue followed: if an applicant later spends or transfers those funds after the case begins (including after being told the fee must be paid), does later depletion retroactively establish IFP eligibility?

The court answered both questions in a way that tightens the connection between § 1915’s text (“all assets”) and contemporary forms of wealth: (1) crypto/app-held funds are “assets” like any other; (2) loan proceeds are not categorically excluded; and (3) eligibility turns principally on the applicant’s ability to pay at the time of filing, not after post-filing depletion—particularly when the depletion occurs with knowledge that the fee is due.

II. Summary of the Opinion

Smith’s initial IFP affidavit disclosed no consistent income but listed approximately $36,000 in a Coinbase account, $4,900 in a Robinhood account, and $1,100 on a Cash App debit card—about $42,000 total. He characterized the Coinbase balance as “the remaining portion of a $200,000 private loan” and described the Robinhood funds as “loaned money.” The magistrate judge recommended denial because these assets were sufficient to pay the $405 filing fee; the district court agreed.

After denial, Smith renewed his request, asserting he had transferred all cryptocurrency to his landlord to avoid eviction. The magistrate judge again recommended denial, reasoning he had sufficient funds at the start of litigation, and the district court adopted that reasoning.

On appeal, the Tenth Circuit:

  • Confirmed appellate jurisdiction over the denial of IFP under the collateral order doctrine (“Cohen doctrine”).
  • Reaffirmed that § 1915 requires consideration of “all assets,” not merely income, and that crypto is not special for § 1915 purposes.
  • Rejected the argument that borrowed funds must be disregarded when assessing IFP eligibility.
  • Held there was no abuse of discretion where Smith had ample assets at filing and later chose to deplete them after learning the court would require payment.
  • Denied IFP on appeal because Smith lacked “a reasoned, nonfrivolous argument” supporting reversal.

III. Analysis

A. Precedents Cited

1. Jurisdiction to Review IFP Denials: Cohen and Tenth Circuit Implementation

The panel first anchored jurisdiction in the collateral order doctrine: Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541 (1949). While IFP denials are interlocutory in a formal sense (they do not decide the merits), they can effectively bar a litigant from proceeding, making immediate review appropriate.

The court relied on Lister v. Dep't of Treasury, 408 F.3d 1309, 1310 (10th Cir. 2005), which squarely holds IFP denials are appealable under Cohen. This procedural predicate matters because it situates the case within a line of authority treating access-to-courts fee rulings as practically final for litigants unable to pay.

2. The Governing IFP Standard and Scope of “Assets”: Lister

Lister v. Dep't of Treasury supplied the central doctrinal framework. The panel quoted Lister for multiple propositions: § 1915 applies to non-prisoners; IFP requires financial inability plus a “reasoned, nonfrivolous” legal and factual basis; and courts must dismiss if the allegation of poverty is untrue or if the action is frivolous, malicious, fails to state a claim, or seeks monetary relief from immune parties. The panel used Lister to emphasize that:

  • Courts assess “all assets”—a broad inquiry not limited to wages or bank balances.
  • Unemployment or inconsistent income does not itself establish IFP eligibility.
  • Review of IFP denial is for abuse of discretion, a deferential standard.

3. Measuring Ability to Pay at the Commencement of Litigation: Lewis

The magistrate judge and district court relied on Lewis v. Burger King, 398 F. App'x 323, 326 (10th Cir. 2010) (unpublished), and the panel endorsed that reliance. Lewis stands for the principle that a district court does not abuse its discretion in denying IFP where the litigant had sufficient funds at the beginning of the case, even if the litigant later becomes indigent.

In Smith, this principle did the heavy lifting against the “funds depleted later” narrative. The court treated the time-of-filing posture as decisive, especially because Smith knew early (upon the June 5 recommendation) that the court would require the fee and nevertheless transferred assets away.

4. “Assets” Over Income and Negative Cash Flow: Grimes and Lay

The court reinforced the primacy of assets—over income streams and cash-flow arguments—by citing:

  • Grimes v. TCF Bank, 769 F. App'x 659, 660 (10th Cir. 2019) (unpublished), where denial of IFP was affirmed despite negative cash flow absent student loans, because the applicant had $4,500 in savings.
  • Lay v. Okla. Dep't of Corr., 746 F. App'x 777, 779 (10th Cir. 2018) (unpublished), where a prisoner’s account balance at filing was enough to cover the fee, supporting denial.

These authorities were used to undercut Smith’s emphasis on “no consistent income” and alleged negative cash flow. The panel’s message is practical: § 1915 is not an income-test statute; it is an ability-to-pay statute.

5. Treatment of Unpublished Decisions: United States v. Ellis

The panel expressly noted that unpublished cases were cited only for persuasive value, citing United States v. Ellis, 23 F.4th 1228, 1238 n.6 (10th Cir. 2022). This is important for readers because the decision itself is unpublished and nonprecedential, and the court is careful to situate its reliance within the circuit’s approach to persuasive, nonbinding authority.

6. Borrowed Funds as Assets: District Court Analogues and Bankruptcy Analogy

On Smith’s core theory—that loan proceeds should be excluded from “assets”—the panel stated he cited no authority and the court found none requiring exclusion. Instead, it cited cases going the other direction:

  • Mitchell v. Brook, No. 21-cv-05014-DMR, 2023 WL 4566288, at *4 (N.D. Cal. July 17, 2023), treating “PPP loan proceeds” as material to IFP eligibility and supporting a finding that an “allegation of poverty was untrue.”
  • McGee v. United States, No. 1:08-cv-154, 2010 WL 520708, at *3 (W.D. Mich. Feb. 8, 2010), rejecting a judge-crafted exception to count borrowed funds deposited into a prison trust account.

Although not a § 1915 case, the panel added an instructive analogy: In re Marshall, 550 F.3d 1251, 1258 (10th Cir. 2008), where loan proceeds were treated as an asset of the bankruptcy estate. The citation signals a broader conceptual point: borrowed money, once received, can constitute property/value under federal legal frameworks, even if it carries repayment obligations.

7. A Narrow Safety Valve: Loan Proceeds May Still Coexist with Indigency

The panel acknowledged that borrowed funds do not automatically defeat IFP, citing: Moreno v. Salvation Army, No. 23-cv-01254, 2024 WL 6934557, at *1 (N.D. Ill. Mar. 19, 2024), where IFP was allowed because the only assets came from a friend’s loan earmarked for children’s educational expenses. This citation functions as a limiting principle: courts may consider the practical availability of funds and constraints on their use, but there is no categorical exclusion for “loan proceeds.”

8. IFP on Appeal: Watkins

For appellate IFP, the court applied Watkins v. Leyba, 543 F.3d 624, 627 (10th Cir. 2008), requiring financial inability plus “a reasoned, nonfrivolous argument.” Because Smith’s legal position lacked supporting authority and did not convincingly rebut the district court’s discretionary assessment, the panel denied IFP on appeal.

B. Legal Reasoning

1. “All Assets” Means All Assets—Including Crypto

A notable feature of the opinion is its straightforward treatment of cryptocurrency: the panel saw no statutory basis to treat crypto differently from traditional accounts. The key reasoning is textual: § 1915 speaks to “all assets,” with no carve-out for asset type, custodial platform, or volatility. By placing crypto on equal footing with bank deposits, the court avoided creating a technologically contingent loophole in access-to-courts fee assessments.

2. Assets, Not Income, Drive the Indigency Determination

Smith’s “no consistent source of income” argument was framed as legally insufficient because § 1915 is not limited to income; it asks whether the applicant “is unable to pay” considering the applicant’s statement of assets. The panel’s reliance on Lister, Grimes, and Lay underscores a pragmatic approach: if you have funds on hand to pay the fee without sacrificing necessities, IFP is not warranted even with minimal income.

3. Loan Proceeds Are Not Categorically Excluded from “Assets”

The court rejected a categorical rule that “borrowed money” must be ignored. Instead, it treated loan proceeds as part of the applicant’s current financial reality—money the applicant can deploy, even if repayment is owed later. The opinion also relied on case-specific facts to show that, even on Smith’s own framing, the funds were at least partially earmarked for litigation (“legal filing costs”), which makes it especially difficult to argue they cannot be used to pay a filing fee.

4. Timing: Ability to Pay Is Assessed at Filing (and Post-Filing Depletion Does Not Cure)

The panel’s most operationally significant move is its endorsement of the time-of-filing lens. The district court did not abuse its discretion by focusing on Smith’s asset position when he filed, rather than later after he transferred funds to his landlord. This reasoning reflects two implicit policy judgments aligned with § 1915’s gatekeeping function:

  • Anti-manipulation: litigants should not be able to manufacture indigency after being told the court expects payment.
  • Administrative workability: courts need a stable reference point for eligibility (commencement of litigation), rather than a moving target.

5. Deference: Abuse-of-Discretion Review and Credibility/Consistency Concerns

Because the standard of review is abuse of discretion, the court did not need to find that Smith’s explanations were false—only that the district court’s decision was reasonable. The panel emphasized inconsistencies and unexplained discrepancies (varying rent arrearage figures; lack of explanation for rapid depletion of a $200,000 loan; unclear why tens of thousands were necessary to cover a few months’ rent). These gaps fortified the conclusion that it was not unreasonable to require payment of a modest $405 fee from substantial disclosed assets.

C. Impact

1. Crypto Neutrality in § 1915: No “Digital Asset Exception”

Even as an unpublished disposition, the opinion is a clear signal to district courts and litigants within the Tenth Circuit: cryptocurrency holdings are simply “assets” for § 1915 purposes. The rationale is textual and easily portable, making it likely to be cited persuasively in future IFP disputes involving digital wallets, exchanges, and app-based balances.

2. Loan-Proceeds Arguments Will Face an Evidentiary Burden

The court did not foreclose the possibility that loan proceeds could coexist with indigency (as the citation to Moreno v. Salvation Army suggests), but the decision effectively raises the bar: applicants will need coherent, well-documented explanations showing why funds are not reasonably available to pay the fee (e.g., strict earmarking, legally enforceable restrictions, or unavoidable competing necessities). Vague assertions that money is “borrowed” and meant for “survival” are unlikely to suffice where the applicant simultaneously acknowledges litigation expenditures.

3. Reinforcement of the Time-of-Filing Benchmark

By reaffirming Lewis v. Burger King, the panel strengthens a practical rule: IFP determinations generally hinge on the applicant’s resources at commencement. This discourages strategic depletion and encourages litigants to prioritize filing fees among other discretionary expenditures if they wish to litigate.

4. Increased Scrutiny of Internal Consistency in IFP Submissions

The opinion illustrates that courts may weigh internal inconsistencies and implausibilities in assessing IFP eligibility, especially under the deferential abuse-of-discretion standard. Future litigants should expect that unexplained gaps (e.g., how a large loan was consumed) can undermine requests for fee waivers.

IV. Complex Concepts Simplified

In forma pauperis (IFP)
A procedure allowing a person who cannot afford court fees to file without prepaying them. Under § 1915, applicants must disclose assets and show inability to pay, and the court must screen for untrue poverty claims and certain defective suits.
“All assets” under 28 U.S.C. § 1915(a)
The statute requires disclosure and consideration of everything of value the applicant possesses—cash, bank balances, app balances, and, as this opinion makes explicit, cryptocurrency holdings.
Collateral order doctrine (the “Cohen doctrine”)
A rule allowing immediate appeal of certain non-final orders that effectively determine an important issue separate from the merits and would be hard to review later. IFP denials can qualify because they may bar a case from proceeding.
Abuse of discretion
A deferential appellate standard. The question is not whether the appellate court would decide the issue the same way, but whether the district court’s decision was unreasonable or based on an erroneous view of the law or clearly wrong facts.
“Reasoned, nonfrivolous argument”
For IFP (including on appeal), the litigant must present more than disagreement; the argument must have a plausible legal and factual basis.

V. Conclusion

Smith v. Oklahoma Attorney General's Office crystallizes several practical rules for § 1915 practice in the Tenth Circuit: courts consider all assets, including cryptocurrency; inconsistent income does not control where meaningful assets exist; loan proceeds are not categorically exempt from the asset calculation; and IFP eligibility is measured chiefly at the start of litigation, not after the applicant later depletes funds—particularly when depletion occurs with knowledge the court expects payment.

Although nonprecedential, the opinion is a modern, text-driven application of § 1915 to contemporary finance, and it provides a persuasive template for future disputes involving digital assets and “borrowed money” theories in indigency determinations.