A U.S. federal judge has rejected claims from nine alleged fraud victims seeking to contest the government’s forfeiture of approximately 127,271 Bitcoin, ruling that the petitioners failed to establish standing and did not plausibly connect their lost funds to the specific wallets seized.
In a Sept. 25 order, Eastern District of New York Judge Rachel P. Kovner struck timely claims from Ath Leepinyo and Connie Wilson and denied seven other claimants permission to file late. All nine lacked Article III standing, the legal threshold required to contest the forfeiture action.
The case stems from a civil forfeiture complaint filed on Oct. 14, 2025, in which the U.S. Department of Justice said the Bitcoin was in U.S. custody and alleged links to fraud and money laundering involving Prince Holding Group, a Cambodian conglomerate, and its chairman, Chen Zhi.
The court treated the claimants’ plausible allegations as establishing, at most, the position of general unsecured creditors — people seeking compensation without a qualifying interest in the particular assets being forfeited. A loss tied to an alleged fraud did not establish ownership of coins in these wallets.
Judge Kovner noted that a constructive trust could give a claimant an equitable ownership interest and standing, but none of the claimants plausibly alleged the necessary connection between their funds and the seized Bitcoin. For example, claimant Lawrence D. Van Dyn Hoven relied on an investigator’s belief that his stolen cryptocurrency was part of the seizure, but the court found his filings offered no supporting facts explaining that belief.
The ruling did not finalize forfeiture or transfer the assets to a reserve. If the government succeeds in forfeiting the Bitcoin, victims may still pursue remission through the Department of Justice. Under 28 CFR 9.8, petitioners must document a specific financial loss directly caused by the offense underlying the forfeiture or a related offense, and they must show no knowing participation in or benefit from the offense, no willful blindness, and no alternative sources of recovery. Remission is capped at a victim’s share of the associated net forfeiture proceeds, so the size of the seizure is no promise of full repayment.
The denial was procedural and does not resolve whether the claimants had a legitimate ownership interest in the Bitcoin. A corrected or renewed claim could be possible depending on deadlines and rules, but the current order resolves these nine claimants’ standing. The 127,000 Bitcoin remains in government custody, and no auction, transfer, or disposition has been announced.
The case highlights the strict procedural requirements in federal civil forfeiture proceedings and the potential market significance of large government-held Bitcoin seizures, given the possibility of future sell-side pressure if such holdings are liquidated.
