A New York Supreme Court judge on Friday stayed all proceedings in a lawsuit that seeks to claim ownership of 39,069 dormant bitcoin wallets, blocking any move toward default judgment ahead of a July 14 hearing.

Justice Kathy J. King signed the order to show cause on June 4 and it was filed publicly on June 5, per the docket. Oral argument is scheduled for 10:30 a.m. on July 14 in Part 6 of the New York County courthouse at 60 Centre Street.

The order stays “all further proceedings in this action on Plaintiffs’ declaratory judgment claim, including any application for an inquest or a default judgment” pending the hearing. King struck the words “and determination” from the boilerplate stay language, so the order on its face stays the case pending the July 14 hearing rather than pending a later determination.

In a separate ruling filed the same day, King found that an earlier motion seeking injunctive relief was moot, referencing the plaintiffs’ First Amended Complaint, filed May 1, and one other docket entry.

The case, captioned ABC Company, XYZ Company, and Noah Doe v. John Does 1-39,069, drew public attention after Sani, founder of bitcoin analytics platform Timechain Index, posted about it on X on May 24. The anonymous plaintiffs, represented by Brooklyn-based Lewis & Lin LLC, are seeking a declaratory judgment establishing ownership over tens of thousands of bitcoin wallets under New York Personal Property Law Article 7-B, the state’s lost-and-found statute.

Essentially, the lawsuit seeks to leverage the state’s lost-and-found statute to claim ownership over the wallets per the theory that, under New York law, if the original owner does not claim lost property within a statutory period, ownership can transfer to the finder. However, this statute has apparently never been applied to digital assets on a blockchain.

Galaxy Research estimated in May that the 39,069 addresses held about 3.8 million BTC, worth roughly $293.5 billion at the bitcoin price it used at the time. At current prices, 3.8 million BTC would be worth about $234 billion. The complaint itself says an unnamed expert valued each wallet’s value at less than $10 because of the challenge and uncertainty of recovering value from the assets.

Listed defendant addresses include the “1Feex” wallet, which holds approximately 80,000 BTC and has long been linked in public reporting to the 2011 Mt. Gox hack, as well as addresses that Galaxy says match Satoshi-era “Patoshi” patterns, linking them to Bitcoin’s founder.

The stay followed a filing by Ian R. Cohen, an M&A attorney at IRC Legal Advisors LLC in Mineola who has been licensed in New York since 2010 and holds bitcoin in self-custody. Cohen filed a May 29 motion seeking permission to appear as an amicus curiae, submitting an affirmation and a 26-page proposed brief opposing the plaintiffs’ theory. Cohen says in the motion he does not represent any named party and has no financial interest in the outcome.

Cohen’s brief organizes its opposition into several discrete points. It argues the lost-and-found statute presumes that the finder has physical custody of a tangible object that can be locked in an evidence locker, which is impossible for blockchain addresses. The wallets were never lost or hidden, the brief argues, but “remained continuously visible to the entire world.” Noah Doe’s algorithm “is not ‘finding'” but “data mining,” and his single algorithmic sweep claiming 39,069 wallets at once is “industrial-scale asset identification” that no provision of the statute contemplates, the filing argues.

A second core argument turns Noah Doe’s own complaint against him. Paragraph 27 of the amended complaint states that Doe identified a “security issue with digital wallets resulting in owners losing their ability to withdraw the contents.” If the targeted owners cannot withdraw because of a security flaw, Cohen writes, “their inability to transact is not voluntary abandonment, it is involuntary deprivation of access.” The brief frames the resulting picture vividly: “A wallet that has been dormant for ten years, whose private key is stored on a steel plate in a bank vault, is not abandoned property. It is securely held property.”

Cohen also flags significant jurisdictional risk if the case proceeds. The 1Feex address, listed first in the plaintiffs’ exhibit, is “the subject of ongoing civil rehabilitation proceedings administered by a court-appointed trustee in Japan, and remains a potential subject of United States Department of Justice criminal forfeiture interest,” the brief notes. A New York state-court declaration of private ownership over those assets “would risk conflict with parallel proceedings and could be subject to challenge under principles of preemption and international comity.”

The brief further argues the declaratory judgment Noah Doe seeks would be functionally useless without the private keys, which the plaintiffs do not have. “The decentralized architecture of the Bitcoin network renders it structurally indifferent to judicial decrees,” Cohen writes, invoking the canonical “not your keys, not your coins” maxim and applying it to the plaintiffs themselves. He warns that such a declaration could be used to mislead “exchanges, custodians, institutional counterparties” into believing the plaintiffs hold enforceable title.

Cohen also pointed to New York’s Abandoned Property Law, which the Legislature amended in 2022 to specifically address virtual currency. That framework routes dormant financial assets to the State Comptroller rather than to private claimants. The Legislature, Cohen writes, has “looked directly at the question of dormant cryptocurrency and answered it,” and Article 7-B was not the answer.

The complaint says Noah Doe used a proprietary algorithm to flag the wallets, then delivered USB drives containing the addresses to the NYPD’s 17th Precinct in batches between December 2024 and April 2025. He then directed a blockchain expert to send OP_RETURN messages to each wallet address pointing to an abandonment notice page hosted by Salomon Brothers Strategic Advisors, a firm that shares a name with, but appears separate from, the historic Wall Street investment bank.

That campaign was documented in October by Galaxy Research as the “Great Bitcoin Dusting,” involving roughly 41,000 OP_RETURN messages sent to wallets collectively holding about 2.3 million BTC. Wallet owners who failed to respond within 90 days were treated by the plaintiffs as having abandoned their wallets.

Despite some delivery failures to early P2PK addresses, Galaxy Research analysts Zack Pokorny and Will Owens wrote, “… whoever carried out the operation clearly understands the Bitcoin network on [a] deep technical level and took elegant measures to cover his tracks and deliver the messages to a large swath of addresses.”

Several of the listed defendant wallets have transacted onchain since the lawsuit was filed. Galaxy Research head Alex Thorn flagged a June 6 movement of 47.26 BTC worth nearly $3 million at current prices from defendant address number 37923, last active on June 17, 2011. A separate wallet named in the suit and dormant since March 2011 moved 35.55 BTC worth about $2.2 million on June 2.

If Cohen is admitted, he would apparently be the only adversarial voice in the proceeding. The 39,069 defendant wallets were “served” via the OP_RETURN messages and the global press release, and the plaintiffs’ theory required that essentially none appear in court, clearing a path toward a default judgment declaring the plaintiffs the owners of the wallets and their contents.

The plaintiffs have not yet filed an opposition to Cohen’s motion, though they have until July 7 to file opposition papers under the briefing schedule set in the order. Lewis & Lin, LLC did not immediately respond to a request for comment from The Block.

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