A wild new scheme is attracting community speculation, as a firm tried to recover up to $150 billion in “abandoned” Bitcoin. It aims to establish a new legal precedent for seizing lost tokens.
Investors purchased the rights to a famous, defunct Wall Street firm and began sending messages to around 40,000 wallets. These contained warnings to prove active ownership or risk a legal battle.
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Reclaiming Abandoned Bitcoin?
Dusting attacks have been out of fashion for several years now, as crypto hackers have largely moved on to newer, dangerous strategies. However, a convoluted story just surfaced employing this technique.
Specifically, a “resurrected” Wall Street firm tried to recover around $150 billion in “abandoned” Bitcoin. A few alleged former employees of Salomon Brothers, a famous Wall Street bank that has been defunct for over 20 years, bought the rights to the firm’s name.
These owners have since opened a business using the reputable name, and apparently partnered with an outside client to try and gain custody over these tokens.
The bizarre incident worked like this: the firm dusted around 40,000 wallets with tiny transactions. Each transaction included an on-chain message, claiming that the owner needed to prove that the Bitcoin had not been abandoned.
If the firm received no response in 90 days, it warned that it might open legal proceedings. All told, it sent these messages to wallets containing around 2.33 million BTC in total.
Some of these “abandoned” Bitcoin owners were clearly rattled by the notices; one user moved tokens worth around $9.7 billion. This encouraged a lot of community interest and speculation. We have no idea how many such wallets are still under active ownership.
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A Convoluted Legal Strategy
For the record, although this incident looks very strange or even shady, it isn’t necessarily accurate to call it a scam. A Salomon Brothers representative spoke on the record about this strategy, calling it an attempt to increase on-chain security:
“Securing wallets protects the millions of wallets that are not abandoned. Risks to all digital wallet holders include government-imposed regulatory limits on crypto holdings in an effort to protect the integrity of crypto markets. All wallet holders therefore have an interest in supporting the resolution of this problem,” he claimed.
Essentially, this may be the opening salvo of a litigation strategy. Several jurisdictions include abandoned Bitcoin in unclaimed property laws, and huge volumes of BTC are lost or dead. “Salomon Brothers” aims to set a new legal precedent, allowing it to take custody of these assets.
The abandoned assets scheme requires a lot of technical prowess over Bitcoin’s blockchain, and spent tens of thousands to deliver on-chain notices. Nonetheless, it seems virtually impossible that Salomon Brothers could successfully seize assets or win in court.
Practically Zero Chance of Success
For one thing, Bitcoin is a global currency, and these “abandoned” wallets are in jurisdictions worldwide. It’d be virtually impossible to sue for ownership in every US state, and certainly impossible to do so abroad.
Plus, even if a judge agreed to the firm’s arguments, it still doesn’t have the private keys. The path from legal precedent to fiscal profit seems impossible.
In other words, this may be a scare tactic to receive funds, or the firm may be trying to isolate a few small court cases in favorable jurisdictions. These abandoned wallets contain Bitcoin worth $150 billion, after all. Even a single victory could be huge, especially if it enables future lawsuits.
Nonetheless, there are too many hurdles for it to be practical. Plenty of these wallets could be destroyed, or still in the custody of their rightful owners. Bitcoin owners shouldn’t worry about legal seizure efforts like this one.
