Laches Bars Belated Rule 41(g) Claims to Cryptocurrency Keys on Destroyed Devices: United States v. Prime (11th Cir. 2025)

Introduction

In United States v. Prime, the Eleventh Circuit confronted a modern twist on a familiar equitable doctrine: whether laches can bar a post-conviction motion under Federal Rule of Criminal Procedure 41(g) seeking the return of property when the property is an external hard drive that allegedly held the cryptographic keys to thousands of bitcoin. The panel (Judge Grant writing, joined by Judges Jill Pryor and Marcus) affirmed the district court’s denial of the motion, holding that laches squarely applied where the defendant repeatedly disclaimed meaningful bitcoin holdings, failed for years to assert any claim to the drive, and the government destroyed the device pursuant to standard practice after notice and non-cooperation.

The core issue was not whether bitcoin is “property” or whether such assets would be forfeitable—questions the court explicitly did not reach—but whether a defendant who denied ownership and delayed asserting a claim could, years later, compel the government to remedy the destruction of a device by effectively replacing what he now valued at over $345 million in cryptocurrency. The Eleventh Circuit held he could not.

Summary of the Opinion

The Eleventh Circuit affirmed the district court’s denial of Michael Prime’s Rule 41(g) motion. Treating the motion as a civil action in equity (as required once criminal proceedings conclude), the court applied laches and found:

Prime delayed unreasonably for more than three years in asserting any claim to the bitcoin keys, repeatedly representing during financial disclosure, probation interviews, and sentencing that he had little or no bitcoin.
The delay was inexcusable; there was no credible reason for the years-long failure to assert the claim, and late-in-time communications did not cure the delay.
The delay prejudiced the government because the hard drive had been destroyed after notice and non-cooperation, meaning the government could not return the property and would, in effect, have to “replace” approximately 3,443 bitcoin—an impossibility and, if required, a staggering prejudice.

Reinforcing equitable principles, the panel underscored that “even if the bitcoin existed—and that’s a big if”—equitable relief would be inequitable under the circumstances. The court also noted that Prime forfeited (by not raising below) a challenge to the adequacy of the government’s proof that the drive was destroyed, and expressly declined to decide whether any bitcoin would have been subject to forfeiture if it existed.

Factual and Procedural Background

In 2019, law enforcement responding to a domestic dispute uncovered a sophisticated counterfeiting operation at Prime’s home, including thousands of counterfeit credit and debit cards, dozens of fake IDs, card-making equipment, and numerous electronic devices. Prime admitted to choking his wife, producing counterfeit financial instruments and IDs, and building and selling ghost-gun style pistols. He acknowledged being paid in bitcoin and, at one point earlier, claimed to have about 3,500 bitcoin.

Agents obtained warrants to seize cryptocurrency but were unable to access any wallets or find keys or recovery phrases. Prime later pleaded guilty to access device fraud, aggravated identity theft, and illegal possession of a firearm. As part of his plea, he agreed to fully disclose all assets he owned or controlled, directly or indirectly.

Post-plea, Prime’s story changed dramatically: in early 2020 financial disclosures and in his probation interview, he represented he held only $200–$1,500 in bitcoin, stating that this small amount was his “only remaining asset.” At sentencing in mid-2020, counsel conceded that the earlier claims of vast bitcoin holdings were not supported by the evidence and that any bitcoin beyond minimal amounts had been liquidated years earlier to purchase assets already seized.

In 2022, the Secret Service sent letters offering to wipe and return certain devices if Prime provided passwords; he responded but then filed a motion for appointment of counsel (mentioning cars and boats, but not bitcoin or the orange external hard drive). According to the record, consistent with agency practice and after giving notice, the government wiped what it could and destroyed the remainder—among them the orange hard drive at issue. More than a year later, Prime filed a Rule 41(g) motion asserting, for the first time, that an orange external drive contained private keys to approximately 3,443 bitcoin, demanding return or recompense. The district court denied the motion, finding the property had been properly destroyed and that laches barred relief. Prime appealed.

Standards of Review

Conclusions of law: de novo.
Factual findings: clear error.
Balancing of equities (including laches): abuse of discretion.

(United States v. Howell, 425 F.3d 971, 973 (11th Cir. 2005); United States v. De La Mata, 535 F.3d 1267, 1279 (11th Cir. 2008))

Analysis

1) Precedents and Authorities Cited

United States v. Howell, 425 F.3d 971 (11th Cir. 2005): Establishes the post-conviction Rule 41(g) motion as a civil action in equity and provides the tri-partite standard of review.
United States v. Potes Ramirez, 260 F.3d 1310 (11th Cir. 2001): Confirms that a district court retains equitable authority over Rule 41(g) motions even if the property has been lost or destroyed; also reflects the Eleventh Circuit’s caution against monetary damages under Rule 41(g) due to sovereign immunity limits, an issue the panel here did not need to reach given laches.
United States v. Barfield, 396 F.3d 1144 (11th Cir. 2005): Articulates laches elements in the Eleventh Circuit—(i) delay in asserting a right, (ii) inexcusable delay, and (iii) undue prejudice to the opposing party.
Access Now, Inc. v. Southwest Airlines Co., 385 F.3d 1324 (11th Cir. 2004): Reinforces the rule against raising new arguments for the first time on appeal; used here to hold that Prime forfeited any challenge to proof of destruction by not raising it below.
Restatement (First) of Restitution § 148(1) (1937) and Black’s Law Dictionary (12th ed. 2024): Quoted for the definition and scope of laches as an equitable bar based on unreasonable delay and prejudice.

2) The Court’s Legal Reasoning

The panel’s reasoning proceeds through the classic laches framework, adapted to the digital-asset context:

Delay: Prime waited more than three years after his plea—and across multiple formal disclosures and a sentencing hearing—to assert any claim to bitcoin or to a device containing keys. During that period, he affirmatively minimized or disclaimed meaningful holdings. The court was unpersuaded by his later explanation that he merely reported prevailing per-coin market value rather than his own holdings, noting both the implausibility of his figures (bitcoin traded at roughly $8,500–$10,500 in February 2020) and his plea obligation to disclose all assets he owned or controlled, directly or indirectly.
Inexcusable Delay: The court found no sound justification for the multi-year delay. Late-stage communications with the Secret Service did not mention bitcoin or the orange hard drive and, even if they had, would account for less than half the total delay. The court emphasized the inconsistency between his duty to disclose “any interest” in assets and his statements to probation that two boats and two vehicles were “the majority” of his assets—statements that could not be true if he held tens of millions of dollars in cryptocurrency.
Prejudice: The hard drive had been destroyed pursuant to standard practice after notice and in light of the presence of contraband data, and because Prime would not cooperate with steps necessary to remove contraband. As a result, the government cannot return the specific property. The panel underscored that if the bitcoin existed, making Prime “whole” would entail the government locating and tendering nearly 3,443 bitcoin—an extraordinary and inequitable burden reflective of the asset’s massive appreciation. That impossibility and cost constitute undue prejudice.

The panel also disposed of collateral arguments. It held that Prime forfeited his challenge to whether the drive was truly destroyed by failing to raise it below. It denied as moot the government’s motion for summary affirmance given the merits disposition. Finally, it declined to rule on whether any bitcoin would have been subject to forfeiture.

3) What’s New or Clarified

Laches in the cryptocurrency-key context: The court applies well-settled laches doctrine to a device alleged to contain private keys to cryptocurrency, treating the destruction of the device—and the consequent practical impossibility of returning or recreating access—as paradigmatic prejudice.
Prejudice amplified by asset appreciation: The opinion recognizes that extreme appreciation in asset value (here, bitcoin’s rise) can magnify prejudice in laches analysis because any equitable “replacement” would be prohibitive or impossible.
Disclosure duties matter: The court treats plea-based asset-disclosure obligations and sentencing-stage representations as central to assessing delay and excusability, signaling that strategic minimizations can later foreclose equitable relief.

4) Interplay with Rule 41(g) Remedies and Sovereign Immunity

Although the court noted that district courts retain equitable authority even if property is lost or destroyed (citing Potes Ramirez), it did not suggest that money damages or compelled replacement of assets is available under Rule 41(g). In the Eleventh Circuit, sovereign immunity generally bars monetary damages in Rule 41(g) proceedings. The court’s discussion of “replacement bitcoin” therefore functions as a prejudice lens under laches—not as a remedial directive—and the panel expressly avoided deciding whether bitcoin, if it existed, would have been forfeitable.

5) Treatment of Digital Evidence and “Contraband” Data

The opinion acknowledges law enforcement’s practice of wiping devices and destroying those that cannot be scrubbed of contraband data (here, stolen identities and card numbers) after giving notice and an opportunity to cooperate. Non-cooperation—especially with passwords—can lead to destruction. The panel’s acceptance of those practices, as framed by the district court, underscores the importance of timely, specific assertions by claimants concerning any exculpatory or personal data contained on such devices.

Impact and Forward-Looking Considerations

Immediate procedural lesson: Defendants seeking the return of digital devices or assets post-conviction must act quickly and consistently. Contradictory disclosures at the plea, probation, or sentencing stages can be fatal to later claims.
Cryptocurrency-specific stakes: Where access depends on private keys stored on a device, destruction of the device is functionally irreversible. Courts are likely to see this as acute prejudice supporting laches. Practitioners should ensure keys are identified, preserved, or otherwise addressed early.
Government practice validated: Agencies may feel more secure in following standard destruction protocols for devices tainted by contraband data after notice and absent cooperation. This increases the burden on claimants to communicate specific, verifiable claims to particular devices.
Valuation-driven prejudice: Rapidly appreciating or volatile assets can transform delay into severe prejudice, strengthening laches defenses. This principle will likely extend beyond crypto to other fast-appreciating assets (e.g., securities, collectibles).
Forfeiture questions remain open: The panel’s express reservation means future cases will need to address when and how cryptocurrency connected to criminal activity is forfeitable—particularly when keys are mixed with non-contraband data on a single device.
Remedies remain constrained: While courts can fashion equitable relief, monetary damages in Rule 41(g) actions against the United States remain generally unavailable in the Eleventh Circuit absent an explicit waiver of sovereign immunity. Litigants may need to consider separate avenues (and timely filings) if they seek compensation for destroyed property.

Complex Concepts Simplified

Rule 41(g): A rule allowing a person to ask a court to order the government to return property seized during a criminal investigation. After criminal proceedings end, the request is treated as a civil, equitable action—meaning the court balances fairness rather than strictly applying legal entitlements.
Laches: An equitable defense that blocks relief if a claimant unreasonably delays asserting a right and that delay harms the other side. Elements:
- Delay in asserting the claim.
- No good excuse for the delay.
- Prejudice caused by the delay (e.g., evidence lost, costs increased, property destroyed).
Cryptocurrency “private keys”: Secret alphanumeric strings that allow control over cryptocurrency at a blockchain address. Without the private key (or a recovery seed), the bitcoin cannot be moved—even though it still exists on the blockchain.
“Contraband” data on devices: Data that is illegal to possess (e.g., stolen identities, credit card numbers). Agencies often cannot return devices containing contraband unless the data is securely removed; absent cooperation, the device may be destroyed.
Forfeiture: Legal process where the government takes ownership of property connected to crime. The Eleventh Circuit did not decide whether any bitcoin at issue would have been forfeitable.
Forfeiture vs. equitable return: Even if property could be subject to forfeiture, the government typically must pursue that process. In Rule 41(g) proceedings post-conviction, courts focus on equitable return, not damages, and may deny relief for equitable reasons like laches.
Forfeiture of arguments on appeal: If a party does not raise an argument in the district court, it generally cannot raise it for the first time on appeal (forfeiture). Here, Prime could not belatedly challenge the sufficiency of proof that the drive was destroyed.

Practice Pointers

Match disclosures to reality: Asset disclosures in plea agreements and probation interviews must be accurate. Inconsistencies can undermine later equitable relief.
Move quickly: If a device contains critical, non-contraband data (especially unique digital keys), immediately notify the government and the court with specificity.
Cooperate on data scrubbing: Provide passwords and proposed protocols to remove contraband data so that a device can be returned rather than destroyed.
Preserve issues: If disputing destruction or chain-of-custody, raise those issues in the district court to avoid forfeiture.
Consider remedial constraints: Be mindful that Rule 41(g) generally does not allow money damages against the United States in the Eleventh Circuit; plan litigation strategy accordingly.

Conclusion

United States v. Prime confirms that laches robustly applies to post-conviction Rule 41(g) motions, and it does so in a technologically salient context: cryptocurrency keys stored on a destroyed device. The Eleventh Circuit emphasized that extended, inexcusable delay—especially when coupled with affirmative disclaimers—can bar equitable relief where the government relied on those representations and cannot restore the property. The opinion underscores the importance of candor and timeliness in asset disclosures and post-plea communications, and it highlights how the appreciation and irreversibility associated with digital assets can heighten prejudice for laches purposes. While leaving open questions about forfeiture and the contours of equitable remedies for destroyed property, the court provides a clear message: equity aids the vigilant, not those who sleep on their rights.