The FBI just beat a convicted fraudster in a $345 million Bitcoin battle

A man claimed the government destroyed his crypto fortune. The courts didn’t buy it.

A convicted identity thief’s attempt to reclaim what he said was a destroyed Bitcoin fortune has officially hit a wall. This week, the Eleventh Circuit Court of Appeals sided with the U.S. government, rejecting Michael Prime’s appeal over a hard drive he claimed contained more than 3,400 Bitcoins — worth over $345 million at today’s prices.

Prime, who was released from prison after serving time for identity theft, credit card fraud, and illegal firearm possession, argued that federal agents had wrongfully destroyed the orange external hard drive that allegedly stored his crypto.

The hard drive that wasn’t

After Prime’s release, the U.S. Secret Service sent him letters offering to return several of his seized devices — on one condition. He had 30 days to provide passwords so the data could be wiped of contraband. If he didn’t respond, the devices would be erased and destroyed.

Prime did respond, requesting a pickup date. But just three days before the scheduled meeting, he filed a lawsuit — one that didn’t mention Bitcoin at all. It wasn’t until later filings that he claimed the hard drive held 3,443 Bitcoins.

The Florida district court dismissed his motion, ruling that the property had been “properly destroyed.” The appellate judges agreed, saying Prime’s claims were inconsistent, unsupported by evidence, and filed far too late.

A history of contradictions

Prime’s story about his Bitcoin holdings changed more than once. During his 2019 plea agreement, he told investigators he owned about 3,500 Bitcoins — much of it, he said, earned years earlier through mining and used to buy cars and boats. Yet by the time of his 2020 sentencing, his financial disclosure listed only $200 to $1,500 worth of Bitcoin as his “remaining asset.”

When the FBI executed multiple warrants, they found no Bitcoin wallets, private keys, recovery phrases, or digital traces of the fortune. Even Prime’s own lawyer cast doubt, telling investigators that any Bitcoin he once had was “from his mining days in Seattle nearly a decade ago,” and most of it had already been spent on seized assets.

A legal hail mary

Years later, Prime tried to invoke Rule 41(g) — a statute allowing courts to return property that’s been unlawfully taken or destroyed. His argument hinged on semantics: he claimed that when he listed $200–$1,500 on his asset form, he wasn’t declaring his total Bitcoin holdings, but rather “the price of a single Bitcoin” at the time.

The court wasn’t convinced. Judges Jill Pryor, Britt Grant, and Stanley Marcus wrote bluntly: “We don’t buy it.” They noted that Bitcoin’s price in early 2020 hovered around $8,500–$10,500, making his explanation impossible.

They also emphasized that Prime had promised to disclose all assets “completely and truthfully” as part of his plea deal — a promise he repeatedly broke.

Too little, too late

Beyond the contradictions, the court said Prime’s delay doomed his case. He waited over a year after the property’s destruction to make his claim — and more than three years after signing his plea agreement. Under the legal doctrine of laches, a court can deny relief when a claimant waits too long to act.

The judges added that there was “little difficulty” concluding the government wouldn’t have destroyed the drive had it believed it contained millions in Bitcoin. “To the extent that the Bitcoin ever existed — and we have our doubts — awarding Prime an equitable remedy here would be inequitable,” they wrote.

In other words: even if the coins were real (and that’s a big if), Prime’s delay and inconsistencies made his case impossible to win.

The final word

The appeals court upheld the lower court’s decision: Prime gets nothing. The hard drive is gone, the supposed 3,443 Bitcoins are unrecoverable, and the U.S. government is off the hook.

As the judges dryly concluded, replacing that stash would now cost hundreds of millions of dollars — “prejudice in anyone’s book.”

Whether the Bitcoin ever truly existed remains an open question. What isn’t in doubt is that for Prime, the digital gold rush has officially run dry.