Strict Rule G Compliance in Cryptocurrency Forfeiture: Untimely, Unverified Claims Lack Statutory Standing and Crypto Volatility Supports Prejudice

I. Introduction

In United States v. 0.40401694 Bitcoin (BTC) Seized from Binance User ID 36895141, et al. (6th Cir. Jan. 28, 2026) (not recommended for publication), the Sixth Circuit affirmed a forfeiture judgment after striking claimants’ filings as both untimely and unverified under the Federal Rules of Civil Procedure Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions (“Supp. R.”) G.

The underlying investigation arose from a cryptocurrency fraud in which approximately $125,000 in cryptocurrency was stolen from an investor (Matthew McNulty) after a scammer obtained security information and drained his wallet. The FBI traced the funds through conversions and transfers into multiple wallets on Binance. The government seized funds from wallets associated with Martins Iyere, Moses Sokale, and Olawumi Stephen Adewale (the “Interested Parties-Appellants”), then filed an in rem civil forfeiture action alleging the seized cryptocurrency was traceable to wire fraud and money laundering.

The key issues on appeal were procedural but dispositive: (1) whether Appellants had statutory standing to contest forfeiture given their failure to file a timely and verified claim under Supp. R. G(5); and (2) whether the district court abused its discretion by denying an extension or an “opportunity to cure” defects.

II. Summary of the Opinion

The Sixth Circuit held that Appellants lacked statutory standing because they did not file a verified claim by the deadline stated in the government’s direct notice, and their eventual claim was not verified (not signed by the claimants under penalty of perjury). The court further held the district court did not abuse its discretion in denying an extension: Appellants waited 357 days after receiving notice, offered no adequate excuse, and the record did not support their assertion that the government induced delay through informal communications. The court also accepted the district court’s finding of prejudice based on the volatility of cryptocurrency. Without statutory standing, Appellants could not challenge summary judgment or raise other arguments about the forfeiture.

III. Analysis

A. Precedents Cited

1. Standing and strict compliance with Rule G

  • United States v. $31,000 in U.S. Currency, 872 F.3d 342 (6th Cir. 2017)
    The opinion treats this case as the principal Sixth Circuit guide on statutory standing in civil forfeiture. It supplies three controlling propositions the panel applies directly: (i) standing turns on compliance with Supp. R. G(5); (ii) the verification requirement deters false claims and assures the claimant’s asserted interest is genuine; and (iii) “[a] single deviation” from the statutory requirements deprives a claimant of the ability to challenge forfeiture. Using that framework, the panel concludes Appellants’ lateness alone defeats standing, and the lack of verification independently does so as well.
  • United States v. $525,695.24, Seized from JPMorgan Chase Bank Investment Account #xxxxxxxx, 869 F.3d 429 (6th Cir. 2017)
    Cited to reinforce that statutory standing requires a timely, verified claim and a responsive pleading. The panel uses it to emphasize that Rule G is not a technicality but the gateway to becoming a proper party in an in rem forfeiture action.
  • United States v. One Men's Rolex Pearl Master Watch, 357 F. App'x 624 (6th Cir. 2009)
    Supports the proposition that a claim lacking verification (signature under penalty of perjury) deprives the claimant of the ability to contest forfeiture. The panel treats the deficiency as independently fatal.

2. Discretion to excuse noncompliance and factors for extensions

  • United States v. Thirty-Five Firearms, 123 F. App'x 204 (6th Cir. 2005)
    Provides a non-exhaustive set of factors for evaluating whether to excuse late or noncompliant filings, including: awareness of seizure, reasons for delay, government encouragement, whether claimants advised the court and government of their interest, and prejudice. The panel approves the district court’s use of these factors while cautioning (via later precedent) that they are not a rigid test.
  • United States v. $22,050 U.S. Currency, 595 F.3d 318 (6th Cir. 2010)
    The panel cites this decision to underscore that the Thirty-Five Firearms factors do not create a mandatory test, and notes $22,050’s distinct posture (default/Rule 55(c)) as a reason it does not control the outcome here. Still, $22,050 is used to frame the analytical flexibility while leaving the district court’s discretion intact.
  • United States v. One 2011 Porsche Panamera, 684 F. App'x 501 (6th Cir. 2017)
    Cited for the historical note that the forfeiture Supplemental Rules were renumbered, clarifying that older cases referring to Rule C(6) map onto current Rule G.
  • United States v. $5,730 in U.S. Currency, 109 F. App'x 712 (6th Cir. 2004)
    Used to support the court’s view that Rule G’s requirements are “relatively plain,” and that competent counsel should appreciate the need for strict compliance. This precedent bolsters the conclusion that a vague or unsupported excuse for delay is insufficient.

3. Appellate consequences of not properly becoming a party

  • Marino v. Ortiz, 484 U.S. 301 (1988)
    Cited for the principle that only parties (or those who properly become parties) may appeal. The panel uses Marino to justify declining to reach Appellants’ remaining arguments once it determines they lacked statutory standing.
  • United States v. 1308 Selby Lane, 675 F. App'x 546 (6th Cir. 2017)
    Applied alongside Marino to reiterate that compliance with the Supplemental Rules is how one “properly become[s] a party” in forfeiture, and that failure to do so forecloses appellate review of merits issues.

4. Standards of review and summary judgment

  • United States v. $174,206 in U.S. Currency, 320 F.3d 658 (6th Cir. 2003)
    Cited for de novo review of summary judgment in forfeiture actions. Although the panel ultimately does not reach merits disputes due to lack of standing, it uses this case to situate the standard of review.

B. Legal Reasoning

1. Rule G as a gatekeeping mechanism for statutory standing

The court frames Rule G compliance as a statutory-standing precondition rather than a curable technicality. Under 18 U.S.C. § 983(a)(4)(A) and Supp. R. G(5), a claimant must file: (i) a verified claim by the deadline in direct notice (at least 35 days after notice is sent), and (ii) an answer (or Rule 12 motion) within 21 days after the claim.

The panel’s reasoning is straightforward:

  • Untimeliness: The direct notice required a claim by December 6, 2023. Appellants filed on October 23, 2024. Under the Sixth Circuit’s strict approach reflected in United States v. $31,000 in U.S. Currency, lateness alone defeats statutory standing.
  • Non-verification: The claim was not signed by Appellants under penalty of perjury as required by Supp. R. G(5)(a)(i)(C). Consistent with United States v. One Men's Rolex Pearl Master Watch, that defect independently bars participation.

2. Discretion to extend time or permit cure—and why it was denied here

The panel recognizes that district courts have discretion to allow late filings or extensions and references the 2006 Advisory Committee Notes suggesting courts should consider whether to permit cure under Rule 15 before striking. But it finds no abuse of discretion because the record did not support “good cause” for a new deadline under Supp. R. G(5)(a)(ii)(A).

Applying the United States v. Thirty-Five Firearms factors as helpful considerations, the court emphasized:

  • Length of delay: 357 days after direct notice.
  • No acceptable excuse: Appellants did not explain why they failed to file once the deadline arrived, even if they had emailed the government two days prior.
  • No government inducement: The record did not support Appellants’ assertion that informal communications “would suffice.” The government’s post-deadline email requesting an explanation of interest suggested, at most, openness to negotiation—not a waiver of Rule G.
  • Notice to government vs. court: Appellants communicated with the government, but did not advise the court within the deadline structure, rendering this factor neutral.
  • Prejudice: The district court’s prejudice finding was upheld, relying on cryptocurrency volatility and the risk of depreciation or worthlessness.

3. Consequence: no merits review without standing

Once the claim and answer were struck, Appellants were not proper parties and thus could not contest summary judgment, discovery issues, or the forfeiture’s propriety. The panel relies on Marino v. Ortiz and United States v. 1308 Selby Lane to end the case at the standing threshold.

C. Impact

  • Crypto forfeiture will be treated like other forfeiture property for procedural access to court: The opinion applies conventional Rule G rigor to cryptocurrency, confirming that novel assets do not relax procedural gatekeeping.
  • Volatility as “prejudice” is operationalized: The court endorses the district court’s reliance on cryptocurrency volatility when assessing prejudice from late filings. Future litigants can expect courts to treat market volatility and asset-risk characteristics as legitimate case-management concerns supporting strict deadlines.
  • Informal discussions with the government do not toll Rule G deadlines: The decision signals that claimants cannot rely on negotiations, emails, or perceived “openness to discuss” as substitutes for filing a verified claim with the court.
  • Appellate review depends on becoming a party through Rule G compliance: The opinion reinforces that failure at the statutory-standing step can foreclose all downstream merits arguments, including objections to forfeiture proof and procedure.

IV. Complex Concepts Simplified

  • In rem forfeiture: A lawsuit against the property itself (here, specific cryptocurrency amounts in identified wallets), not primarily against a person. Individuals must file claims to assert an interest in the defendant property.
  • Statutory standing (in forfeiture): The procedural entitlement to be heard in a forfeiture case. In the Sixth Circuit, it typically requires strict compliance with Supp. R. G(5)—timely filing and verification.
  • Verified claim: A claim signed by the claimant under penalty of perjury. This is designed to deter false claims and ensure accountability. An attorney’s signature alone does not satisfy Supp. R. G(5)(a)(i)(C).
  • Direct notice vs. publication: Potential claimants who “reasonably appear” to have an interest must receive direct notice, and that notice sets a minimum 35-day claim deadline. Publication notice applies to others and uses a different deadline scheme.
  • Good cause extension: Courts may extend deadlines, but claimants must justify delay with credible reasons; mere negotiations or silence from the government generally will not suffice.

V. Conclusion

The Sixth Circuit’s decision underscores a hard procedural truth in civil forfeiture: to contest forfeiture, a claimant must timely file a verified claim under Supp. R. G(5), and failure to do so strips statutory standing. The court further confirms that district courts may deny extensions where the delay is extreme, excuses are unsupported, the government did not induce noncompliance, and where prejudice—including cryptocurrency volatility—supports enforcing deadlines. The opinion’s broader significance lies in reaffirming Rule G as a strict gateway to party status, thereby limiting forfeiture litigation to those who comply with the procedural prerequisites for participation and appeal.