In a Sept. 25 order, Judge Rachel P. Kovner turned down requests from nine purported fraud victims who wanted to challenge the forfeiture of roughly 127,271 Bitcoin.
Because their submissions failed to establish a plausible link between their missing money and the targeted wallets, they must pursue a different avenue for potential recovery should the government prevail in the forfeiture proceedings.
The judge for the Eastern District of New York dismissed the on-time filings submitted by Connie Wilson and Ath Leepinyo, while also refusing seven additional claimants the right to file out of time. Kovner ruled that all nine individuals failed to meet Article III standing requirements, which are necessary to contest the legal action.
Proceedings kicked off with a civil forfeiture filing on Oct. 14, 2025. At that time, the Department of Justice announced that the cryptocurrency was being held by the US and tied the funds to money laundering and fraud allegations involving Chen Zhi, chairman of the Cambodian conglomerate Prince Holding Group.
The court viewed the claimants’ credible allegations as demonstrating, at best, the status of general unsecured creditors—individuals looking for reimbursement who lack a legally qualifying interest in the exact assets slated for forfeiture.
Sustaining a fraud-related loss was not enough to prove ownership of the specific coins housed within these digital wallets.
While the ruling acknowledged that a constructive trust might establish standing by granting an equitable ownership interest—a remedy capable of recognizing property rights stemming from an individual’s own resources—none of the claimants successfully demonstrated a plausible connection between their lost money and the confiscated Bitcoin.
Taking Lawrence D. Van Dyn Hoven as an example, his argument rested solely on an investigator’s conviction that his stolen crypto ended up in the seized stash. Kovner noted that his legal papers failed to provide any factual basis backing up that assumption.
What remission could provide
If the government ultimately secures the forfeiture of the Bitcoin, Kovner indicated that victim remission could serve as an alternative path. This mechanism enables qualifying victims to apply to the DOJ for compensation out of the forfeited assets, even if they currently lack a direct ownership claim to the property.
Pursuant to 28 CFR 9.8, applicants are required to substantiate a distinct monetary loss stemming directly from the crime prompting the forfeiture—or a connected offense—alongside meeting additional criteria. These further conditions mandate that applicants neither knowingly participated in nor profited from the crime, and did not engage in willful blindness.
Additionally, claimants must demonstrate that they have not already been reimbursed for their losses and that they lack other reasonably accessible avenues for recovery.
Should the seized assets fall short of satisfying all approved petitions, acknowledged victims may be granted proportional payouts. Because payouts are limited to each victim’s portion of the related net forfeiture proceeds, the immense scale of the Bitcoin seizure does not guarantee full restitution.
The ruling issued on Sept. 25 determines the standing of these nine claimants. Whether they ultimately recover any funds hinges on the government winning its forfeiture lawsuit as well as a separate, discretionary review of a petition outlining documented losses.