In the field of digital currency, Bitcoin has always been a hot topic that has attracted much attention. However, there have been reports recently that Bitcoin exchanges in the United States may be caught in a vortex of litigation for handling abandoned Bitcoins. This incident has triggered widespread discussion and attention in the industry. Let us delve into this issue and reveal the inside story.

In the digital currency market, Bitcoin is one of the most well-known and widely used cryptocurrencies. However, over time, some Bitcoins are abandoned or forgotten in the wallets of various exchanges. These abandoned Bitcoins may cause a series of problems, especially when exchanges try to trade with these abandoned Bitcoins.

First of all, for exchanges, handling abandoned Bitcoins may bring legal risks. Once the exchange uses these abandoned Bitcoins for transactions and the transactions are confirmed, it may violate relevant laws and regulations. In a country with a strict legal system like the United States, once legal issues are involved, the exchange is likely to face the risk of litigation. This will not only have a negative impact on the reputation of the exchange, but may also result in huge legal costs.

Secondly, abandoned Bitcoins may also have an unstable impact on the market. When exchanges inject these abandoned Bitcoins into the market, it may cause price fluctuations and even affect the stability of the entire digital currency market. This uncertainty will not only make investors worried, but also make regulators increase their supervision of the digital currency market, further exacerbating market uncertainty.

In addition to legal and market risks, exchanges may also face technical and security challenges. Abandoned bitcoins are often unused for a long time, which may pose security risks. Once hacked, they will pose a threat to the overall security of the exchange. Therefore, exchanges need to strengthen the management and monitoring of abandoned bitcoins to ensure that they do not become security loopholes.

In response to this issue, the industry calls on exchanges to strengthen risk management and establish a sound mechanism for handling abandoned bitcoins. Exchanges need to formulate clear policies and procedures to regulate the handling of abandoned bitcoins to avoid legal risks. At the same time, exchanges also need to strengthen technical investment, improve security protection capabilities, and ensure that abandoned bitcoins will not affect the normal operation of exchanges.

In summary, the risk of abandoned bitcoin litigation that may be faced by US bitcoin exchanges cannot be ignored. Exchanges need to recognize the seriousness of this problem and take effective measures to prevent it. Only by strengthening management and standardizing operations can exchanges remain invincible in the fierce market competition and ensure the stability and healthy development of the digital currency market.

Have you ever wondered where forgotten or unclaimed property goes? Every year in the United States, millions of people forget their accounts or forget property that is due to them. When these assets are forgotten and unclaimed for a long time, banks or other organizations will give custody of the property to the state government until the owner is identified. This process is called escheatment.

As cryptocurrencies flourish, states are beginning to turn their "property escheatment" targets to cryptocurrencies in order to seek rich potential profits. This is undoubtedly a move to make money under the banner of regulation.

On July 21, BeInCrypto reported: "The New York Council has proposed a new bill that unclaimed cryptocurrencies will be considered abandoned, allowing the government to liquidate them and transfer them to the vault.

So far, Illinois, Colorado, Kentucky, Tennessee and Utah have the same property seizure law, which also defines cryptocurrencies as assets. If they are unclaimed, they may also be "confiscated".

It can be foreseen that under the increasing regulatory pressure, the promulgation of this law may cause a series of problems, especially those companies with cryptocurrency payment functions, such as exchanges, companies that accept Bitcoin payments, and third-party custodians, must be prepared to meet this law. If this law is ignored, it is likely that in the future Will receive lawsuits from investors "inexplicably".

There will be more problems in the future

As more and more people and companies regard Bitcoin and cryptocurrencies as legal payment methods, more unclaimed property problems may arise.

Before analyzing the impact of this property seizure bill on cryptocurrencies, let's first clarify the issue of cryptocurrency "holders".

In most cases, those who have more Bitcoin investors or miners will store Bitcoin in cold wallets. If the private key is lost or forgotten, this type of Bitcoin will be lost in the sea, and there is no need to consider the issue of holders, and the country cannot obtain it.

But if you store your coins in exchanges, wallet providers, custodians, etc., the situation is different.

Generally speaking, machines that have the ability to access and transfer your cryptocurrency Institutions, such as some Bitcoin custodians that hold your private keys, are likely to be directly regarded as your cryptocurrency "holders" and can transfer the supposedly abandoned cryptocurrency to the state government.

But if the private key or password is only in your hands, and the holder's ability to access and transfer cryptocurrency is restricted, this situation is not subject to the property seizure law.

So the question is, under what circumstances will cryptocurrency be considered abandoned? How do state governments deal with these coins when they receive them, or do they just take them for themselves? Will the crypto market be affected by fluctuations?

Will the cryptocurrency market cause turmoil?

In March 2018, Coinbase was hit with a class action lawsuit, and it was accused by investors of violating California's "Unclaimed Property Law" and engaging in illegal and unfair business practices.

The story dates back to 2017, when Coinbase allowed users to send BTC, ETH, LTC, and BCH to external email addresses with a link that recipients could click to create a Coinbase account and claim the sent digital currency. However, few people had heard of Bitcoin and cryptocurrency at the time, and not every cryptocurrency in the email would be claimed. Coinbase did not notify the recipients again, and finally regarded the cryptocurrencies as its own.

Many users only found the email in 2018, but they could no longer claim it. Users questioned Coinbase, believing that it illegally occupied unclaimed digital currencies without notifying the original sender and did not transfer them to the U.S. state government in accordance with the Unclaimed Property Act.

However, due to the lack of relevant laws on cryptocurrencies, the lawsuit was eventually dismissed by the court in May 2019. If the New York State bill is passed this time, Coinbase may be sued again, and companies with the same problems as Coinbase may also face the disaster of litigation.

As for when cryptocurrencies are considered abandoned, the New York State bill does not mention it, and it depends on the actual situation according to the rules. Generally in the real estate world, the definition of dormancy varies depending on the type of property involved, but it is usually considered dormant if there is no change within 3 to 5 years.

Generally speaking, the government will not retain these abandoned cryptocurrencies. They will be sold directly on exchanges, and the money from the sale will go directly into the state's escheatment fund. However, cryptocurrencies are volatile, and due to direct liquidation into cash, they may lose the appreciation value of Bitcoin. If someone claims it in the future, they can only get the cash liquidated at that time.

In addition, some people worry that if the liquidated crypto assets are sold in large quantities by the government, the price will directly fall, harming the cryptocurrency industry and market participants. This is less likely to happen. For example, the Bulgarian government, which has been hotly debated for holding more Bitcoin reserves than its gold reserves, actually sold 200,000 Bitcoins captured in illegal activities in piecemeal form to avoid causing a market crash.

Conclusion

From the above, it can be seen that this legislative action is undoubtedly stealing "abandoned" cryptocurrencies under the pretext of regulation, just as the existing law stipulates that abandoned bank deposits are confiscated.

Liquidating these cryptocurrencies may have little impact on the crypto market, but it will bring legal risks to holders such as third-party custodians.

As the use and acceptance of cryptocurrencies grow, industry participants (including cryptocurrency exchanges, online wallet providers, and others) should understand the unclaimed property laws in their states and report unclaimed cryptocurrencies in a timely manner to avoid lawsuits. For owners of digital assets, they should keep in touch with the holders to ensure that the property is not dormant.

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Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
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Note: The above exchange logo is the official website registration link, and the text is the APP download link.