Petition for Writ of Certiorari — Battle Born Investments Company, LLC, et al., Petitioners v. United States

NO. ______

In the

Supreme Court of the United States

________________

BATTLE BORN INVESTMENTS COMPANY, LLC; FIRST

100 LLC; 1ST ONE HUNDRED HOLDINGS LLC,

Petitioners,

v.

UNITED STATES OF AMERICA,

________________

Respondent.

On Petition for Writ of Certiorari

To the United States Court of Appeals

For the Ninth Circuit

________________

PETITION FOR WRIT OF CERTIORARI

________________

Rod J. Rosenstein

Counsel of Record

Kellam M. Conover

KING & SPALDING LLP

1700 Pennsylvania Avenue NW

Washington, DC 20006

(202) 737-0500

rrosenstein@kslaw.com

Counsel for Petitioners

April 25, 2024

QUESTION PRESENTED

In a civil forfeiture action, the government bears

the burden of proving that the property it seeks to

forfeit is connected to unlawful activity. See 18

U.S.C. § 983(c).

Any claimant with a “colorable

interest in the property” has standing to file a claim.

United States v. Seventeen Thousand Nine Hundred

Dollars ($17,900.00) in U.S. Currency, 859 F.3d 1085,

1090 (D.C. Cir. 2017).

This standard is “very

forgiving” to ensure that legitimate claimants can

contest the forfeiture of their own property. Id. at

1089–90 (quotation marks omitted).

The question presented is:

Where a claimant asserts an ownership interest,

does the claimant’s standing at summary judgment

require only some evidence of ownership, as six

circuits hold, or also an explanation of how the

claimant acquired ownership, as three circuits hold?

ii

CORPORATE DISCLOSURE STATEMENT

Petitioner Battle Born Investments Company,

LLC is owned by SJC Ventures Holdings, LLC and has

no parent corporation. No publicly held corporation

owns 10% or more of Battle Born Investments

Company, LLC.

Petitioner First 100, LLC is owned by 1st One

Hundred Holdings, LLC and has no parent

corporation. No publicly held corporation owns 10% or

more of First 100, LLC.

Petitioner 1st One Hundred Holdings, LLC is

owned by dozens of members and has no parent

corporation. No publicly held corporation owns 10% or

more of 1st One Hundred Holdings, LLC.

iii

RELATED PROCEEDINGS

There are no proceedings in state or federal trial

or appellate courts, or in this Court, directly related to

this case under Supreme Court Rule 14.1(b)(iii).

iv

TABLE OF CONTENTS

QUESTION PRESENTED .......................................... i

CORPORATE DISCLOSURE STATEMENT ............ ii

RELATED PROCEEDINGS ..................................... iii

TABLE OF AUTHORITIES .................................... viii

PETITION FOR WRIT OF CERTIORARI ................ 1

OPINIONS BELOW ................................................... 1

JURISDICTION ......................................................... 1

STATUTORY PROVISIONS INVOLVED................. 1

PRELIMINARY STATEMENT.................................. 1

STATEMENT OF THE CASE ................................... 3

A. Statutory Background .................................. 3

B. Factual Background ..................................... 5

C. Procedural History ....................................... 7

REASONS FOR GRANTING THE PETITION....... 10

I.

The Government Needs To Stop Avoiding

Judicial Scrutiny Of Its Forfeiture Claims ...... 12

II. The Decision Below Entrenches A 6-3 Circuit

Split On The Question Presented ..................... 17

A. Six Circuits Do Not Require Claimants

To Explain Their Ownership Interest ....... 17

B. Three Circuits Require Claimants To

Explain Their Ownership Interest ............ 22

III. The Decision Below Is Wrong ........................... 25

A. Petitioners Established A Colorable

Interest In The 1HQ3 Wallet ..................... 25

v

B. The Ninth Circuit Was Wrong To Require

Petitioners To Explain That Interest ........ 26

IV. There Are No Vehicle Problems ........................ 30

CONCLUSION ......................................................... 31

APPENDIX

Appendix A

Memorandum Opinion of the United

States Court of Appeals for the Ninth

Circuit, United States v. Battle Born Invs.

Co., No. 22-16348 (Aug. 18, 2023)............... App-1

Appendix B

Judgment and Order of the United States

District Court for the Northern District of

California,

United

States

v.

Approximately 69,370 Bitcoin (BTC),

Bitcoin Gold (BTG) Bitcoin SV (BSV) &

Bitcoin Cash (BCH) seized from

1HQ3Go3ggs8pFnXuHVHRytPCq5fGG8

Hbhx, No. 20-cv-07811 (Aug. 16, 2022) ...... App-8

Appendix C

Order of the United States District Court

for the Northern District of California

Granting Motions to Strike Claims,

Denying Motion to Intervene, United

States v. Approximately 69,370 Bitcoin

(BTC), Bitcoin Gold (BTG) Bitcoin SV

(BSV) & Bitcoin Cash (BCH) seized from

1HQ3Go3ggs8pFnXuHVHRytPCq5fGG8

Hbhx, No. 20-cv-07811 (Mar. 25, 2022) .... App-11

vi

Appendix D

Order of the United States Court of

Appeals for the Ninth Circuit Denying

Rehearing and Rehearing En Banc,

United States v. Battle Born Invs. Co.,

No. 22-16348 (Dec. 12, 2023)..................... App-24

Appendix E

Declaration of Jeremiah Haynie in

Support of United States’ Motion to

Strike, No. 20-cv-07811 (N.D. Cal. July

13, 2021)..................................................... App-26

Appendix F

Declaration of Jacky Lee in Support of

Claimants’ Opposition to Motion to Strike

and Select Exhibits, No. 20-cv-07811

(N.D. Cal. Aug. 10, 2021) .......................... App-37

Appendix G

Declaration of Jay Bloom in Support of

Claimants’ Opposition to Motion to

Strike, No. 20-cv-07811 (N.D. Cal. Aug.

10, 2021)..................................................... App-75

Appendix H

Declaration of Joseph Gutierrez in

Support of Claimants’ Opposition to

Motion to Strike, No. 20-cv-07811 (N.D.

Cal. Aug. 10, 2021) .................................... App-79

vii

Appendix I

Declaration of Ryan Andersen in Support

of Claimants’ Opposition to Motion to

Strike, No. 20-cv-07811 (N.D. Cal. Aug.

10, 2021)..................................................... App-89

Appendix J

Relevant Provisions

18 U.S.C. § 983 ........................................ App-93

viii

TABLE OF AUTHORITIES

Cases

Leonard v. Texas,

137 S. Ct. 847 (2017).................................... 3, 12, 13

Mercado v. U.S. Customs Serv.,

873 F.2d 641 (2d Cir. 1989) ................................... 18

United States v. $8,720.00,

264 F.3d 1140,

2001 WL 822496 (5th Cir. 2001) ........................... 23

United States v.

Seventeen Thousand Nine Hundred Dollars

($17,900.00) in U.S. Currency,

859 F.3d 1085 (D.C. Cir. 2017) ........ 4, 9, 14, 20, 21,

28, 29, 30

United States v.

$31,000.00 in U.S. Currency,

872 F.3d 342 (6th Cir. 2017).......... 2, 3, 5, 11, 14, 18

United States v.

$38,570 U.S. Currency,

950 F.2d 1108 (5th Cir. 1992)................................ 22

United States v.

U.S. Currency, $81,000.00,

189 F.3d 28 (1st Cir. 1999) .................................... 21

United States v.

$133,420.00 in U.S. Currency,

672 F.3d 629 (9th Cir. 2012).................................. 23

United States v.

$148,840.00 in U.S. Currency,

521 F.3d 1268 (10th Cir. 2008).......... 3, 4, 11, 17, 20

26, 27, 28, 29

ix

United States v.

Funds in Amount of $239,400,

795 F.3d 639 (7th Cir. 2015)............................ 19, 29

United States v.

$304,980.00 in U.S. Currency,

732 F.3d 812 (7th Cir. 2013).................................. 19

United States v.

$515,060.42 in U.S. Currency,

152 F.3d 491 (6th Cir. 1998)............................ 18, 27

United States v.

$557,933.89, More or Less, in U.S. Funds,

287 F.3d 66 (2d Cir. 2002) ..................... 4, 11, 18, 28

United States v.

$579,475.00 in U.S. Currency,

917 F.3d 1047 (8th Cir. 2019)................................ 19

United States v.

$774,830.00 in U.S. Currency,

2023 WL 1961225 (6th Cir. Feb. 13, 2023) ........... 19

United States v.

$11,071,188.64 in U.S. Currency,

825 F.3d 365 (8th Cir. 2016).................................. 19

United States v. Cambio Exacto, S.A.,

166 F.3d 522 (2d Cir. 1999) ............................. 18, 27

United States v. Contents of Account Nos.

3034504504 & 144-07143,

971 F.2d 974 (3d Cir. 1992) ................................... 24

United States v. Funds Held ex rel. Wetterer,

210 F.3d 96 (2d Cir. 2000) ..................................... 13

x

United States v. One 1998 Mercury Sable

Vin: 1MEMF5OU4WA621967,

122 F. App’x 760 (5th Cir. 2004) ........................... 23

United States v. One Lincoln Navigator 1998,

328 F.3d 1011 (8th Cir. 2003)...................... 5, 14, 19

United States v.

One Parcel of Real Prop. with Bldgs.,

Appurtenances & Improvements Known as

116 Emerson St.,

942 F.2d 74 (1st Cir. 1991) .................................... 21

United States v. Phillips,

883 F.3d 399 (4th Cir. 2018).................................. 22

United States v.

Real Prop. Located & Situated at

404 W. Milton St.,

650 F. App’x 233 (5th Cir. 2016) ........................... 22

United States v.

Real Prop. Located at 110 Collier Drive,

793 F. Supp. 1048 (N.D. Ala. 1992)....................... 13

United States v. Starlin,

76 F.4th 92 (2d Cir. 2023)...................................... 15

United States v.

Union Bank for Sav. & Inv. (Jordan),

487 F.3d 8 (1st Cir. 2007) ...................................... 21

Statutes & Rules

11 U.S.C. § 541 ........................................................... 6

18 U.S.C. § 983 ....................................... 1, 4, 5, 19, 28

Fed. R. Civ. P. Supp. R. G .................................... 8, 15

N.D. Cal. Civ. L.R. 16-7 .............................................. 7

xi

Other Authorities

Cassella, Stefan D.

Asset Forfeiture Law in the United States

§ 7-13(d) (2d ed. 2012) ....................................... 5, 14

Compl.,

Battle Born Invs. Co. v. DOJ,

No. 1:24-cv-00067 (D.D.C. Jan. 8, 2024),

ECF No. 1 ............................................................... 10

Knepper, Lisa, et al.,

Inst. for Justice, Policing for Profit:

The Abuse of Civil Asset Forfeiture

(3d ed. 2020), available at https://ij.org/wpcontent/uploads/2020/12/policing-for-profit3-web.pdf ...................................................... 4, 12, 13

Note,

How Crime Pays: The Unconstitutionality of

Modern Civil Asset Forfeiture as a Tool of

Criminal Law Enforcement,

131 Harv. L. Rev. 2387 (2018) ............................... 13

Pimentel, David

Civil Asset Forfeiture Abuses:

Can State Legislation Solve the Problem?,

25 Geo. Mason L. Rev. 173 (2017) ......................... 13

van den Berg, Michael

Comment: Proposing a Transactional

Approach to Civil Forfeiture Reform,

163 U. Pa. L. Rev. 867 (2015) ................................ 13

PETITION FOR WRIT OF CERTIORARI

Petitioners Battle Born Investments Co., LLC,

First 100 LLC, and 1st One Hundred Holdings LLC

respectfully petition for a writ of certiorari to review

the judgment of the United States Court of Appeals for

the Ninth Circuit.

OPINIONS BELOW

The opinion of the court of appeals is unpublished

and reproduced at App.1–7. The judgment of the

district court is unpublished and reproduced at App.8–

10, and the order of the district court is unpublished

and reproduced at App.11–23.

JURISDICTION

The Ninth Circuit affirmed the judgment on

August 18, 2023, App.7, and denied rehearing en banc

on December 12, 2023, App.24–25. On March 11,

2024, Justice Kagan extended the time to file a

petition for writ of certiorari to and including April 25,

2024. This Court has jurisdiction under 28 U.S.C.

§ 1254(1).

STATUTORY PROVISIONS INVOLVED

Relevant portions of the civil-forfeiture statute, 18

U.S.C. § 983, are reproduced in the Appendix at

App.93–98.

PRELIMINARY STATEMENT

This petition concerns the “most valuable asset

ever seized” through civil forfeiture: a bitcoin wallet

now worth more than $4.4 billion. C.A. Excerpts of

Record (“ER”)-21. Petitioners claim ownership of that

wallet and provided evidence of their ownership. Yet

2

the Ninth Circuit held that nobody can contest the

forfeiture. Something has gone seriously wrong when

a court allows the government to appropriate an asset

worth over $4.6 billion without ever having to prove

its entitlement to that property.

The Ninth Circuit, like many other courts, was led

astray by the government’s aggressive litigation of

legitimate claimants’ standing. In its zeal to avoid

judicial scrutiny of its forfeiture claims, the

government has repeatedly pressed a “problematic

interpretation” of standing that “would require

claimants to help prove the government’s case against

them.” United States v. $31,000.00 in U.S. Currency,

872 F.3d 342, 353–54 (6th Cir. 2017).

In this case, Petitioners acquired an ownership

interest in the 1HQ3 wallet from Raymond Ngan,

whose ownership and control were evidenced both by

Ngan’s own representations and by a forensic

examination of his electronic devices. To avoid any

adversarial testing, the government moved to strike

Petitioners’ claims on the pleadings—but then

convinced the Ninth Circuit to grant summary

judgment based on a heightened standard requiring

not just some evidence of ownership (which

Petitioners provided), but also proof of how “Ngan

would have come into ownership of” the wallet.

App.5–6. Petitioners thus were deemed to lack

standing because they supposedly didn’t have enough

evidence of ownership, but they were denied the

opportunity to obtain more evidence because they

supposedly lacked standing.

The government’s efforts to deny claimants

standing even when they provide some evidence of

3

ownership has entrenched a 6-3 circuit split. At least

six circuits require at summary judgment only “an

initial evidentiary showing” that the claimant has an

ownership interest. United States v. $148,840.00 in

U.S. Currency, 521 F.3d 1268, 1273 (10th Cir. 2008).

In contrast, at least three circuits—including the

Ninth Circuit below—add an additional step by

requiring an explanation of how the claimant acquired

ownership. These latter circuits “turn the burden of

proof in forfeiture actions on its head” by effectively

requiring claimants to prove lawful ownership merely

to establish standing—i.e., to prove their property is

unconnected to unlawful activity, when it should be

the government’s burden to prove it is connected to

such activity. $31,000.00, 872 F.3d at 353.

This case presents a rare and ideal opportunity for

the Court to restore uniformity in this important area.

This case illustrates the harmful consequences of

imposing too high an evidentiary burden on claimants

to establish standing. Courts should allow legitimate

claimants to contest the government’s right to keep

their valuable property. Unless this Court intervenes,

nobody will be allowed to contest the then-largest civil

forfeiture on record.

STATEMENT OF THE CASE

A. Statutory Background

Civil asset forfeiture is “widespread and highly

profitable” to the government and can lead to

“egregious” government abuses. Leonard v. Texas, 137

S. Ct. 847, 848 (2017) (Thomas, J., respecting denial of

certiorari). That is because it allows the government

to seize valuable property “without any predeprivation

4

judicial process” and permanently keep that property

through a civil proceeding against an inanimate object

(the property itself).

Id. at 847.

Often, the

government obtains forfeiture without ever having to

prove it is entitled to keep the seized property. See

Lisa Knepper et al., Inst. for Justice, Policing for

Profit: The Abuse of Civil Asset Forfeiture (“Policing

for Profit”) 23–24 (3d ed. 2020), available at https://

ij.org/wp-content/uploads/2020/12/policing-for-profit3-web.pdf.

Anyone with a “colorable interest in the . . .

property” can file a claim in a civil forfeiture

proceeding. $148,840.00, 521 F.3d at 1273; see 18

U.S.C. § 983(a)(2)(A).

A claimant asserting an

ownership interest can establish standing at summary

judgment by providing “some evidence tending to

support the existence of that ownership interest.”

$148,400.00, 521 F.3d at 1276. This standard is “very

forgiving” so as to enable legitimate claimants to

contest the government’s entitlement to their

property. United States v. Seventeen Thousand Nine

Hundred Dollars ($17,900.00) in U.S. Currency, 859

F.3d 1085, 1089–91 (D.C. Cir. 2017) (quotation marks

omitted).

On the merits, the government is ordinarily

required to prove that the property is connected to

unlawful activity.

18 U.S.C. § 983(c).

“[I]f the

government fails to do so, the property is not

forfeited—regardless of whether or not the claimant

turns out to be the actual owner of the property.”

United States v. $557,933.89, More or Less, in U.S.

Funds, 287 F.3d 66, 77, 79 n.10 (2d Cir. 2002)

(Sotomayor, J.). If the government satisfies its merits

5

burden, the burden shifts to the claimant to prove it is

nevertheless entitled to the property as an “innocent

owner.” 18 U.S.C. § 983(d). But when the government

defeats each claimant’s standing, it can be awarded

the property without ever having to prove anything—

and citizens thereby lose a critical safeguard against

overzealous forfeiture efforts.

Unsurprisingly, the government routinely

challenges claimants’ standing so as to avoid having

to prove its entitlement to forfeit their property. See

Stefan D. Cassella, Asset Forfeiture Law in the United

States § 7-13(d) (2d ed. 2012) (“much of the litigation

in civil forfeiture cases turns on the claimant’s

standing”). Courts often have been “[m]isled by the

government’s” tactics, United States v. One Lincoln

Navigator 1998, 328 F.3d 1011, 1014 (8th Cir. 2003),

including by its “problematic interpretation” of

standing, $31,000.00, 872 F.3d at 353.

B. Factual Background

1. This forfeiture action concerns the so-called

“1HQ3” wallet, which contains roughly 69,370 bitcoin

and related cryptocurrency now worth over $4.4

billion. See App.2. According to the government’s

inadmissible hearsay theory, “Individual X” stole that

bitcoin in 54 distinct transactions from wallets

supposedly “controlled by” the Silk Road marketplace,

and then transferred the bitcoin to the 1HQ3 wallet.

ER-172. The government has never been required to

prove these allegations, however, nor has it disclosed

the identity of the mystery person who allegedly

voluntarily forfeited his interest in an asset now worth

$4.4 billion, nor has it alleged that that asset was ever

used in any criminal activity. See ER-169–76.

6

2. Petitioners claim to own the 1HQ3 wallet as a

consequence of innocently acquiring ownership.

Specifically, First 100 and 1st One Hundred

Holdings claim ownership as “judgment creditors”

who in March 2017 “obtained a $2,211,039,718.46

judgment against [Raymond Ngan],” App.3, for

contractual breaches resulting in approximately $1

billion in lost profits (doubled for punitive damages),

App.81. In May 2018, after Ngan filed for bankruptcy,

Battle Born Investments purchased from the Chapter

7 bankruptcy trustee all of Ngan’s property interests,

whether disclosed or not, and “wherever located and

by whomever held.” ER-88; ER-99 (bankruptcy court

approving “good faith” sale of all of Ngan’s assets,

whether disclosed or not); see 11 U.S.C. § 541(a).

There were several valuable assets that

Petitioners later discovered Ngan had owned but not

disclosed in his bankruptcy estate, including an $8

million bank account and 272 kilograms of Monatomic

Ultra-Pure Electrolytic Copper Powder, a rare isotope

of enormous value. App.81; ER-87–88. When ordered

to produce all information stored on his laptops and

cell phone, Ngan caused his associate to flee the

country with those devices. App.91. To identify other

undisclosed assets of Ngan’s estate, Petitioners

recovered those personal electronic devices in April

2019 through a writ of assistance and had an expert

conduct a forensic examination. App.91.

Petitioners found on Ngan’s laptop and cell phone

substantial evidence that he owned the 1HQ3 wallet,

including that, between 2017 and early 2019, Ngan

(1) contacted multiple investors about selling large

quantities of bitcoin, see ER-35–72; (2) sent one

7

investor a proposed contract for the sale of bitcoin,

App.39; App.51–56, and sent an image of 1HQ3 when

asked which wallet would fund the sale, App.40;

App.57–64; and (3) secured that sale by setting up an

escrow account, App.39; App.42–50, and drafting a

purchase agreement, escrow agreement, and notice of

conditional offer under which Ngan would not receive

any funds unless he turned over the bitcoin, App.42–

50; App.51–56; App.65–74.

Evidence from the forensic examination of Ngan’s

devices further indicated that (4) Ngan had “control

over the 1HQ3 Wallet,” App.77, and (5) when Ngan’s

associate fled the country with Ngan’s personal

electronic devices, he deleted 54 files from those

devices, App.83–84, presumably to destroy evidence of

Ngan’s interest in the wallet.

C. Procedural History

1. The government subsequently filed this action,

and Petitioners submitted verified claims that they

are innocent owners who acquired ownership of the

1HQ3 wallet from Ngan. See ER-159–60; ER-163–67.

While Petitioners suspect Ngan is, or is associated

with, Individual X, they stated they need “additional

information” to confirm that suspicion, ER-160; ER166, because the government has never disclosed

Individual X’s identity.

Petitioners were not given the chance to discover

further evidence in support of their claims. The local

rules barred discovery until after entry of a case

management order. See N.D. Cal. Civ. L.R. 16-7.

Before that order could be entered, the government

8

immediately moved to strike Petitioners’ claims for

lack of standing. ER-110.

Because there had been no discovery or

evidentiary hearing, the government could bring only

“a motion for judgment on the pleadings.” Fed. R. Civ.

P. Supp. R. G(8)(c)(ii)(B).

Nevertheless, the

government improperly asked the district court to

decide that motion based on a hearsay declaration by

an IRS agent who had no firsthand knowledge of the

facts. See App.26–36 (declaration); D. Ct. Dkt. No. 90

at 25 (motion to strike).

Petitioners opposed the motion, explaining they

“ha[d] sufficiently pled their ownership interest in

1HQ3.” D. Ct. Dkt. No. 98 at 17. In an abundance of

caution, though, they also submitted sworn

declarations and exhibits detailing the evidence of

Ngan’s prior ownership of the 1HQ3 wallet, see ER34–113, while arguing they “would be entitled to

discovery prior to any adverse decision” if the motion

were sua sponte converted into a summary-judgment

motion, D. Ct. Dkt. No. 98 at 21.

2. The district court granted the government’s

motion. App.12. Despite recognizing that Ngan’s

conduct was “a representation by him that he owned

the 1HQ3 wallet,” the district court held that

Petitioners lacked standing because they had not

“pleaded facts” indicating “how Ngan would have come

into ownership of the Bitcoin in [the] 1HQ3 wallet,

much less lawful ownership.” App.22.

3. On appeal, the government conceded that the

district court had “granted the government’s motion to

strike on the basis that [Petitioners] failed to properly

9

plead standing,” C.A. Dkt. No. 29 at 32, and had not

“convert[ed] [its] analysis to one of summary

judgment,” id. at 36–37. That should have ended the

appeal:

As the Ninth Circuit correctly held,

Petitioners’ “assertions” of ownership were “sufficient

at the pleading stage.” App.5.

Stunningly, though, the government went on to

urge the Ninth Circuit to grant summary judgment

based on the theory that Petitioners lacked “standing

because they did not prove an ownership interest in

the bitcoin in 1HQ3 by a preponderance of the

evidence.” C.A. Dkt. No. 29 at 45. The government

thus pressed the Ninth Circuit to do what the district

court had not done and convert the government’s

motion into a summary-judgment motion—even

though no discovery had been taken nor any

competent evidence proffered to satisfy the

government’s initial burden on summary judgment.

The government also insisted that the court conflate

Petitioners’ merits burden with the “very forgiving”

standard for establishing standing. $17,900.00, 859

F.3d at 1089 (quotation marks omitted).

Led astray by the government’s unwarranted

argument, the Ninth Circuit held that while

Petitioners sufficiently pleaded ownership, they

“failed to carry their burden to establish some

evidence” of ownership on summary judgment. App.5.

Petitioners’ extensive evidence that Ngan owned the

1HQ3 wallet was not enough, the panel held, because

Petitioners did not explain “how Ngan would have

come into ownership” of the wallet or Ngan’s

“association with Individual X,” App.6—which is

irrelevant because the government introduced no

10

competent evidence that Individual X owned the

wallet and, in any event, would be impossible because

the government has never disclosed Individual X’s

identity. Other circuits would not require evidence

connecting Ngan’s “ownership interest” to Individual

X, but the panel did so because “no authority in [that]

Circuit” foreclosed that approach. App.7.

4. In October 2023, after the panel issued its

ruling, Petitioners submitted a FOIA request to the

U.S. Department of Justice’s Executive Office for U.S.

Attorneys, seeking the names of (1) Individual X,

(2) “any person believed to have owned, possessed, or

controlled” the 1HQ3 wallet, and (3) the individual

who consented to forfeiture of the 1HQ3 wallet. See

Compl. ¶¶ 12–13, Battle Born Invs. Co. v. DOJ, No.

1:24-cv-00067 (D.D.C. Jan. 8, 2024), ECF No. 1. When

the government refused to provide that information,

Petitioners filed a FOIA complaint. See id., ¶ 21. The

government still has not disclosed the requested

information.

5. The Ninth Circuit meanwhile denied rehearing

en banc. App.24. This timely petition followed.

REASONS FOR GRANTING THE PETITION

Certiorari is needed to ensure there is meaningful

judicial scrutiny of the largest civil forfeiture ever: a

bitcoin wallet worth over $4.4 billion. To avoid

adversarial testing of its forfeiture claim, the

government prompted the courts below to require

Petitioners to satisfy an improperly heightened

standard for establishing standing. As a result, the

government stands to reap a $4.4 billion windfall

11

without ever having to prove it is actually entitled to

keep that property.

In case after case, the government has

aggressively pressed a problematic view of standing

that bars legitimate claimants from contesting the

forfeiture of their own property.

As Justices

Sotomayor and Gorsuch have recognized, the

government’s approach to standing is “mistaken,”

United States v. $557,933.89, More or Less, in U.S.

Funds, 287 F.3d 66, 76 (2d Cir. 2002) (Sotomayor, J.),

and “fundamental[ly] flaw[ed],” United States v.

$148,840.00 in U.S. Currency, 521 F.3d 1268, 1274

(10th Cir. 2008) (Gorsuch, J., on panel). The Court

should put a stop to this litigation tactic, and this

petition presents a uniquely good vehicle for doing so.

Certiorari is further warranted because the

decision below entrenches a 6-3 circuit split on what a

claimant asserting an ownership interest must show

to establish standing at summary judgment. All

circuits agree that a claimant must demonstrate “a

facially colorable interest in the res.” $148,840.00, 521

F.3d at 1273. But whereas at least six circuits require

only “an initial evidentiary showing” that the claimant

has an ownership interest, id., at least three circuits—

including the Ninth Circuit below—further require

claimants to explain how they obtained that

ownership interest. These latter circuits “turn the

burden of proof in forfeiture actions on its head” by

effectively requiring claimants to prove the property

was acquired lawfully, when it should be the

government’s burden to prove the property is the fruit

of unlawful activity. United States v. $31,000.00 in

U.S. Currency, 872 F.3d 342, 353 (6th Cir. 2017).

12

This petition presents a rare and ideal

opportunity for the Court to restore uniformity in this

important area. Courts should allow legitimate

claimants to contest the government’s entitlement to

keep their property. Unless this Court intervenes,

however, nobody will be allowed to contest whether

the government is entitled to keep the largest civil

forfeiture on record.

The Court should grant certiorari.

I.

The Government Needs To Stop Avoiding

Judicial Scrutiny Of Its Forfeiture Claims.

This case presents an immensely important

question: whether the government can bar property

owners from contesting the forfeiture of property

when they provide some evidence of ownership. The

Court should grant certiorari to put an end to this

overzealous practice.

A. In a criminal forfeiture proceeding, the

government must prove beyond a reasonable doubt

both that the owner committed a crime and that its

property was connected to that crime. Not so with civil

forfeiture, which allows the government to

permanently keep property for itself—often without

any proof whatsoever. The government can “seize the

property without any predeprivation judicial process.”

Leonard v. Texas, 137 S. Ct. 847, 847 (2017) (Thomas,

J.). And it often permanently keeps that property

based on nothing more than pleadings—not proof.

The government profits enormously from this

anomalous system. Between 2000 and 2019, federal

agencies received more than $45.7 billion from the

forfeiture of property. Policing for Profit at 162. This

13

“highly profitable” system has made civil forfeitures

“widespread” in recent decades. Leonard, 137 S. Ct.

at 848 (Thomas, J.). Some agencies obtain over 98%

of their forfeitures using the lax civil-forfeiture

process. Policing for Profit at 24.

Given these profit incentives, law-enforcement

decisions are “often governed not by justice, but by

department wish lists.” Note, How Crime Pays: The

Unconstitutionality of Modern Civil Asset Forfeiture as

a Tool of Criminal Law Enforcement, 131 Harv. L.

Rev. 2387, 2392 (2018) (quotation marks omitted). At

one point the Department of Justice’s “marching

orders” were, “Forfeit, forfeit, forfeit. Get money, get

money, get money.” Michael van den Berg, Comment:

Proposing a Transactional Approach to Civil

Forfeiture Reform, 163 U. Pa. L. Rev. 867, 907 (2015)

(quotation marks omitted).

Unsurprisingly, this system “has led to egregious

and well-chronicled abuses.” Leonard, 137 S. Ct. at

848 (Thomas, J.). Examples of abuse “are easy to

find.” David Pimentel, Civil Asset Forfeiture Abuses:

Can State Legislation Solve the Problem?, 25 Geo.

Mason L. Rev. 173, 178 (2017). Time and again,

“corrupting incentives” have led the government to

(1) pursue “aggressive but marginal [forfeiture]

claims,” United States v. Funds Held ex rel. Wetterer,

210 F.3d 96, 110 (2d Cir. 2000); (2) “pressur[e]

property owners into settling” so it can “tak[e] a

portion of [their] property,” Policing for Profit at 23

(quotation marks omitted); and even (3) use “[f]alse

and [m]isleading [a]ffidavits . . . to maneuver . . .

[c]ourt[s] into” forfeiting innocent owners’ most

valuable possessions, United States v. Real Prop.

14

Located at 110 Collier Drive, 793 F. Supp. 1048, 1051–

52 (N.D. Ala. 1992).

B. This case provides a unique opportunity for

the Court to put an end to one of the government’s

most problematic practices and to do so with “the most

valuable asset ever seized” through civil forfeiture.

ER-21.

1. The government routinely challenges standing

to try to shortcut judicial scrutiny of its forfeiture

proceedings. See Cassella, Asset Forfeiture Law in the

United States § 7-13(d) (“much of the litigation in civil

forfeiture cases turns on the claimant’s standing”).

The reason why is obvious: The government prefers to

have any adversarial testing come from “an inanimate

object” rather than a legitimate claimant with a stake

in the outcome. $17,900.00, 859 F.3d at 1091. To avoid

having to prove its case, the government consistently

pushes courts to shut out legitimate claimants for lack

of standing.

In many cases, appellate courts have called out

the government for taking overzealous steps to avoid

judicial scrutiny of its forfeiture claims. In one case,

the district court was “[m]isled by the government[ ]”

to “resolve[ ] disputed issues of fact, including

credibility issues” at summary judgment. United

States v. One Lincoln Navigator 1998, 328 F.3d 1011,

1014 (8th Cir. 2003). In another, the government

hoodwinked the district court to adopt a “problematic

interpretation” of standing that “would require

claimants to help prove the government’s case against

them.” United States v. $31,000.00 in U.S. Currency,

872 F.3d 342, 353–54 (6th Cir. 2017); see id. at 352

(rebuking government’s “sirens’ song” because it

15

“rest[ed] on flawed assumptions”). In yet another, the

government “raised an eyebrow” by insisting a claim

must be struck as untimely even though the

government did not “hold[ ] itself to the scrupulous

punctuality that it demand[ed] of [that] pro se

litigant.” United States v. Starlin, 76 F.4th 92, 98 &

n.3 (2d Cir. 2023).

2. This case is yet another example of the

government’s zeal for profits gone awry. One might

hope the government would welcome transparency

and adversarial testing when permanently taking $4.4

billion of someone’s property.

Instead, the

government has disputed Petitioners’ standing at

every step even though their ownership interest in the

1HQ3 wallet is indisputably innocent—acquired as it

was through Ngan’s bankruptcy estate without any

knowledge of how Ngan had acquired it.

Before the district court, the government

immediately moved to strike Petitioners’ claim for lack

of standing before they could take any discovery.

Though allowed to bring only “a motion for judgment

on the pleadings,” Fed. R. Civ. P. Supp. R.

G(8)(c)(ii)(B), the government improperly asked that

court to rely on additional “facts set forth herein” from

a declaration by an IRS agent who had no personal

knowledge and merely relayed the government’s

hearsay-based theory about how the bitcoin ended up

in the 1HQ3 wallet. D. Ct. Dkt. No. 90 at 25; see

App.26–36 (declaration). That misled the district

court into erroneously holding that Petitioners lacked

standing for not “plead[ing] facts” indicating how the

previous owner “Ngan would have come into

ownership of the Bitcoin in 1HQ3.” App.22.

16

The government was even more brazen on appeal.

Despite conceding that the district court had ruled

only on the “plead[ings],” C.A. Dkt. 29 at 32, and had

not “convert[ed] [its] analysis to one of summary

judgment,” id. at 36–37, the government urged the

Ninth Circuit to convert its motion into one for

summary judgment, id. at 45. The government made

this stunning request even though Petitioners had

been allowed no discovery and the government itself

had offered no admissible evidence to satisfy its initial

summary-judgment burden.

Even worse, the

government pressed the court of appeals to hold

Petitioners to their merits burden and deny them

“standing because they did not prove an ownership

interest in the bitcoin in 1HQ3 by a preponderance of

the evidence.” Id.

The government’s aggressive tactics worked. The

Ninth Circuit converted the motion into one “on

summary judgment,” then held that although

Petitioners had sufficiently pleaded standing by

alleging Ngan’s prior ownership of the 1HQ3 wallet,

they had not sufficiently proven it because they failed

to explain “how Ngan would have come into

ownership” of the wallet. App.5–6.

The government’s gamesmanship thus led to an

obvious Catch-22: Petitioners lack standing because

they don’t have enough evidence of ownership, yet

they can’t obtain more evidence through discovery

because they lack standing. App.6. This result is

fundamentally unfair and at odds with basic

principles of justice. The Court should grant certiorari

to prevent the government from depriving legitimate

17

claimants of the opportunity to dispute the permanent

forfeiture of their property.

II. The Decision Below Entrenches A 6-3

Circuit Split On The Question Presented.

All circuits agree that, to have standing at

summary judgment, a claimant must establish “a

facially colorable interest in the res such that he would

be injured if the property were forfeited.” $148,840.00,

521 F.3d at 1273. The circuits are sharply and

intractably split, however, on the standard for

establishing an ownership interest.

At least six circuits require only “an initial

evidentiary showing” of the fact that the claimant

owns the property. Id. In contrast, at least three

circuits—including the Ninth Circuit below—

additionally require an explanation of how the

claimant acquired that ownership interest. The Ninth

Circuit tacitly acknowledged this split in noting that

“no authority in [that] Circuit” foreclosed imposing the

latter requirement. App.7. Certiorari is urgently

needed to restore uniformity to this important area of

the law.

A. Six Circuits Do Not Require Claimants

To Explain Their Ownership Interest.

At least six circuits do not require claimants to

explain their ownership interest to establish standing

at summary judgment. Rather, these circuits require

only “an allegation of ownership and some evidence of

ownership”—such as possession, title plus indicia of

control, or a financial stake. $148,840.00, 521 F.3d at

1275 (quotation marks omitted).

18

The Second Circuit requires only “[a]n allegation

of ownership and some evidence of ownership” to

establish standing at summary judgment. United

States v. Cambio Exacto, S.A., 166 F.3d 522, 527 (2d

Cir. 1999) (quotation marks omitted). While that

court requires additional “indicia of reliability or

substance” on “a naked claim of possession,” Mercado

v. U.S. Customs Serv., 873 F.2d 641, 645 (2d Cir. 1989)

(emphasis added), no explanation is required on an

ownership claim. As then-Judge Sotomayor has

explained, “the mere fact that [a claimant] had

custody of [seized] money orders” is not enough to

establish standing. $557,933.89, 287 F.3d at 79 n.10

(quotation marks omitted). But that evidence plus a

claimant’s “verified claim that he was the owner of the

funds” is enough, id. (emphasis added)—even where

the claimant has “assert[ed] the Fifth Amendment” to

avoid explaining that ownership interest, id. at 73.

The Sixth Circuit applies the same rule, sharply

distinguishing between the evidentiary standards for

ownership and possession claims. See $31,000.00, 872

F.3d at 350 (“Article III standing may require some

contextual information for a possessory interest, but

even that is distinct from the assertion of an

ownership interest.”).

In that circuit, “some

explanation . . . regarding the claimant’s relationship

to the seized property” is required only where “mere

physical possession of property” is claimed. United

States v. $515,060.42 in U.S. Currency, 152 F.3d 491,

498 (6th Cir. 1998). Accordingly, the Sixth Circuit has

found standing based on a claimant’s unexplained

ownership interest because the property was seized

“from the trunk of [his] rental car,” which indicated

“he exercised some form of control over it.” United

19

States v. $774,830.00 in U.S. Currency, 2023 WL

1961225, at *4 (6th Cir. Feb. 13, 2023).

The Seventh Circuit similarly requires only “an

assertion of ownership combined with some evidence

of ownership.” United States v. Funds in Amount of

$239,400, 795 F.3d 639, 642–43 (7th Cir. 2015).

Requiring an explanation of ownership, that court has

held, would “effectively shift the burden of proof from

the government back to the claimant” to prove the

“property is not subject to forfeiture.” Id. at 646. The

Seventh Circuit thus has upheld standing despite the

claimant’s “refus[al] to explain his ownership

interest.”

United States v. $304,980.00 in U.S.

Currency, 732 F.3d 812, 818 (7th Cir. 2013) (“While . . .

the [claimants] have not proved their ownership . . . ,

they do claim such ownership, and the money was

found in [their] possession. This is sufficient to give

them a colorable claim to the money.”).

The Eighth Circuit requires only evidence of

“possession, control, title, [or] financial stake” to

establish standing based on an ownership interest.

United States v. $11,071,188.64 in U.S. Currency, 825

F.3d 365, 371 (8th Cir. 2016) (quotation marks

omitted).

Unlike in other circuits, even an

unexplained “certificate of title”—standing alone,

without any indicia of “‘dominion or control’”—

“establishes a prima facie case of ownership” in the

Eighth Circuit. One Lincoln Navigator 1998, 328 F.3d

at 1013–14 (quoting 18 U.S.C. § 983(d)(6)). Thus, no

explanation of an ownership interest is required. Cf.

United States v. $579,475.00 in U.S. Currency, 917

F.3d 1047, 1049 (8th Cir. 2019) (en banc) (no

“information about how [the claimant] obtained the

20

funds at issue” is needed to establish statutory

standing).

The Tenth Circuit also does not require a claimant

to “expla[in] . . . how he came into possession of the

[property]” in an ownership case. $148,840.00, 521

F.3d at 1274. That court requires such “explanatory

evidence” solely if “an individual claims only a

possessory interest.” Id. at 1274–75. Accordingly,

even where a claimant does not “explain how he came

into ownership,” he has standing at summary

judgment if there is “some evidence tending to support

the existence of that ownership interest.” Id. at 1276–

77; see id. at 1277 (claimed owner had standing where

currency was found hidden in cooler inside his rental

car).

The D.C. Circuit agrees that “an assertion of

ownership combined with some evidence of ownership

is sufficient to establish standing” at summary

judgment. $17,900.00, 859 F.3d at 1090 (quotation

marks omitted). “[E]specially when cash is at issue,”

that court has reasoned, it would be “unfair[ ] and

unrealistic” to “requir[e] more than ‘some evidence’ of

ownership” such as “pro[of] that [the] cash is

legitimate.” Id. at 1090–91. While the claimants in

$17,900.00 happened to “explain[ ] how they came to

own the money” at issue, that was not relevant to the

court’s holding. See id. at 1094. What mattered was

that they had “submitt[ed] extensive sworn testimony

as evidence of their claim.” Id. at 1092. The D.C.

Circuit explained that requiring evidence beyond the

mere fact of ownership would “run[ ] the danger of

impermissibly shifting the merits burden to the

claimant—tantamount to, say, making a claimant

21

prove that their property is unconnected to unlawful

activity.” Id. at 1091.

In addition to the above circuits, the First Circuit

likewise requires only “an allegation of ownership and

some evidence of ownership” to establish standing

based on an ownership interest. United States v. U.S.

Currency, $81,000.00, 189 F.3d 28, 35 (1st Cir. 1999).

This test for standing is “very forgiving” and can be

satisfied even where the claimant “is not a statutory

‘owner’ of the [seized] funds,” United States v. Union

Bank for Sav. & Inv. (Jordan), 487 F.3d 8, 22 (1st Cir.

2007) (quotation marks omitted), or the claimant’s

original asserted ownership interest is “later held to

be an improper basis for her claim,” United States v.

One Parcel of Real Prop. with Bldgs., Appurtenances

& Improvements Known as 116 Emerson St., 942 F.2d

74, 79 (1st Cir. 1991). Accordingly, the First Circuit

has not required claimants to explain their ownership

interest.

Had the government filed this forfeiture action in

any of the above circuits, Petitioners would not have

been required to explain their ownership of the 1HQ3

wallet to prevail on the government’s motion to

dismiss and instead would have been allowed to

pursue discovery and challenge the government’s

evidence. It is untenable that the fortuity of where the

government has filed suit can dictate whether or not a

claimant has the right to contest a $4.4 billion

forfeiture.

22

B. Three Circuits Require Claimants To

Explain Their Ownership Interest.

At least three circuits—including the Ninth

Circuit below—require claimants to explain their

asserted ownership interest to establish standing at

summary judgment.

The Fourth Circuit has held that “a claimant

alleging an ownership interest in seized property

must, at a minimum, present some evidence regarding

how the claimant came to possess the property.”

United States v. Phillips, 883 F.3d 399, 403 (4th Cir.

2018) (quotation marks omitted). In Phillips, the

claimant submitted at summary judgment some

evidence of ownership—including a verified claim

stating that the $200,000 “found in [his brother’s]

storage unit belonged to him,” and a sworn affidavit

from his brother corroborating that the claimant had,

in fact, “stor[ed] [his] life savings of $200,000 in the

storage unit.” Id. at 402. But because the claimant

“presented no objective evidence” of how “he

accumulated $200,000,” and his expenses suggested

“he could not” save that much, the court held he lacked

standing. Id. at 405–06.

The Fifth Circuit requires “some evidence of [an]

ownership interest in order to establish standing” at

summary judgment. United States v. $38,570 U.S.

Currency, 950 F.2d 1108, 1112 (5th Cir. 1992)

(emphasis removed). But because that case included

evidence of the claimant’s “involvement with the

currency” at issue, id., that court has since

consistently required claimants to explain their

ownership interest, as well. See, e.g., United States v.

Real Prop. Located & Situated at 404 W. Milton St.,

23

650 F. App’x 233, 235 (5th Cir. 2016) (per curiam)

(“While the fact that property was seized from a

claimant is prima facie evidence of [the claimant’s]

entitlement to it, the claimant must, nevertheless,

come forward with additional evidence of ownership if

there are serious reasons to doubt [their] right to the

property.”) (quoting United States v. $8,720.00, 264

F.3d 1140, 2001 WL 822496, at *1 (5th Cir. 2001) (per

curiam)); United States v. One 1998 Mercury Sable

Vin: 1MEMF5OU4WA621967, 122 F. App’x 760, 763–

64 (5th Cir. 2004) (per curiam) (requiring claimant to

“present sufficient evidence to establish a facially

colorable claim that he, not the [criminal] offenses [at

issue], was the source of the funds”).

The same is true in the Ninth Circuit. In addition

to requiring “some evidence of ownership,” United

States v. $133,420.00 in U.S. Currency, 672 F.3d 629,

639 (9th Cir. 2012) (quotation marks omitted), that

court requires some explanation of the claimant’s

“ownership interest,” App.7. Petitioners submitted

more than some evidence that they acquired

ownership of the 1HQ3 wallet from Ngan. Infra III.A.

Yet the Ninth Circuit held below that Petitioners

lacked standing because they did not explain “how

Ngan would have come into ownership of the bitcoin

in 1HQ3” or his “association with Individual X,” the

anonymous person who allegedly stole the bitcoin.

App.6. By denying rehearing en banc, the entire

Ninth Circuit blessed this approach and declined to

revisit the issue.

Without squarely deciding the issue, the Third

Circuit has reached the same result by holding that a

claimant asserting an ownership interest must “rebut

24

the government’s evidence that [someone else]

actually owned and controlled” the property at issue.

United States v. Contents of Account Nos. 3034504504

& 144-07143, 971 F.2d 974, 986 (3d Cir. 1992). There,

the claimant corporation presented some evidence of

ownership: It “had legal title to the seized account”

and through its legal representative had “exercised

dominion and control over the money in [those]

accounts.” Id. at 977, 985–86. But because the

company failed to provide “evidence of legitimate

business dealings”—i.e., “transactions with currency

traders other than those . . . linked to the laundering

of drug proceeds”—the Third Circuit held it lacked

standing to challenge the forfeiture of its own

accounts. Id.

The government may be tempted to argue that the

Third Circuit’s decision is sui generis in that the

claimant’s legal representative was supposedly its

alter-ego and the “true owner of the accounts.”

Account Nos., 971 F.2d at 975. But the Third Circuit

expressly stated that the government’s alter-ego

theory of forfeiture “does not change our analysis.” Id.

at 986.

Accordingly, claimants asserting an

ownership interest in that circuit must “rebut the

government’s evidence” on the merits simply to

establish standing. Id.

This 6-3 circuit split is deep and ripe and will only

persist and deepen absent this Court’s intervention. It

violates basic principles of justice that, based solely on

where a forfeiture action is filed, a different

evidentiary burden may apply to innocent owners

seeking to challenge the forfeiture of their own

25

property. Certiorari is therefore needed to restore

uniformity to this important area of the law.

III. The Decision Below Is Wrong.

Certiorari is warranted for another reason:

Because Petitioners provided “some evidence” that

they owned the 1HQ3 wallet, they should be allowed

to contest the government’s seizure of that $4.4 billion

cryptocurrency wallet—or else nobody will.

A. Petitioners Established A

Interest In The 1HQ3 Wallet.

Colorable

Despite receiving no discovery, Petitioners

established that they have a concrete stake in this

action that gives them standing to challenge the

government’s authority to forfeit the 1HQ3 wallet.

Petitioners indisputably acquired any ownership

interest held by Ngan. To show Ngan had a colorable

ownership interest, Petitioners submitted evidence

that, between 2017 and early 2019, Ngan (1) contacted

multiple investors about selling enormous quantities

of bitcoin, see ER-35–72; (2) sent one investor a

proposed contract for a bitcoin sale, App.39; App.51–

56, and sent an image of 1HQ3 when asked which

wallet would fund the sale, App.40; App.57–64; and

(3) secured that sale by setting up an escrow account,

App.39; App.42–50, and by drafting various

agreements under which Ngan would not be paid if

“the [bitcoin] are not delivered within 24 hours,”

App.54, or the buyer does not “confirm . . . receipt of

the [bitcoin],” App.44. These agreements would have

been pointless had Ngan not actually had the bitcoin

to sell.

26

In addition to that evidence, a forensic

examination of Ngan’s electronic devices showed that

(4) Ngan’s business correspondence “indicated his

control over the 1HQ3 Wallet,” App.77, and (5) Ngan’s

associate deleted 54 files from Ngan’s devices, App.83–

84—presumably to conceal the 54 bitcoin transfers

from Silk Road that the government alleges ended up

in the 1HQ3 wallet, see ER-172.

It may turn out that Petitioners are not ultimately

entitled to the 1HQ3 wallet. But especially when all

factual inferences are drawn in their favor, Petitioners

have demonstrated a “colorable interest” that gives

them standing to contest the government’s otherwise

unopposed forfeiture.

B. The Ninth Circuit Was Wrong To

Require Petitioners To Explain That

Interest.

The Ninth Circuit denied Petitioners standing

because they failed to explain their “ownership

interest”—i.e., “how Ngan would have come into

ownership of the bitcoin in 1HQ3” or his “association

with Individual X.” App.6–7. That decision is

grievously wrong and operates to shut out legitimate

claimants from contesting whether the government

can permanently take their property.

1. The “fundamental flaw” in requiring claimants

to explain their ownership interest is that it overlooks

“an important difference, for standing purposes,”

between possessory and ownership interests.

$148,840.00, 521 F.3d at 1274 (Gorsuch, J., on panel).

“[W]here an individual claims only a possessory

interest,” the claimant must “support the legitimacy of

27

the possessory interest alleged.” Id. at 1275–76 (citing

authorities). This “distinct evidentiary burden exists”

because someone from whom property is seized

“cannot be said to suffer . . . injury in fact” from any

forfeiture unless they have “a legally cognizable

possessory interest in the property.” Id. at 1276;

accord $515,060.42, 152 F.3d at 498 (“a courier

carrying cash from an unknown owner to an unknown

recipient, resolute in his determination to give no

explanation except that he was asked to transport

cash . . . must be prepared to demonstrate that he has

a lawful possessory interest.”) (quotation marks

omitted). What distinguishes a lawful possessor or

bailee from “a mere custodian” or unknowing

transporter is an explanation of the claimant’s

relationship to the seized property. Cambio Exacto,

166 F.3d at 527–28. Absent such an explanation,

therefore, there is an “absence of demonstrated injury”

and no standing. Id. at 528.

The same is not true in ownership cases, however.

Where an individual presents evidence of a “facially

colorable” ownership interest, no “explanatory

evidence” is needed to establish that claimant’s stake

in the outcome of the forfeiture action. $148,840.00,

521 F.3d at 1273–75. That is because evidence of that

ownership interest—such as title plus control, or a

financial stake—itself establishes a specific, concrete

stake in the forfeiture. “It may well be that forfeiture

ultimately will prove appropriate, but . . . it [is]

obvious that such a claimant risks injury within the

meaning of Article III and thus may have his day in

court.” Id. at 1276.

28

2. The decision below also “conflate[s] the

constitutional standing inquiry with the merits

determination that comes later.” $17,900.00, 859 F.3d

at 1091 (quotation marks omitted). Standing in

forfeiture actions is “truly threshold only—to ensure

that the government is put to its proof” by someone

with a stake in the outcome. $557,933.89, 287 F.3d at

79 (Sotomayor, J.). Because only a “colorable interest”

is needed to have a concrete stake in a forfeiture

action, “a claimant need not definitively prove the

existence of that interest” to have standing.

$148,840.00, 521 F.3d at 1273 (Gorsuch, J. on panel).

Thus, no explanation of that ownership interest is

required.

An explanation of ownership often is not even

relevant to the merits of a forfeiture action. That is

because “the claimant’s ownership” is not “at issue in

determining the primary question of the government’s

right to forfeiture,” i.e., whether the property was

involved in illegal activity. $557,933.89, 287 F.3d at

77; see 18 U.S.C. § 983(c). If the government fails to

satisfy its burden, “the property is not forfeited—

regardless of whether or not the claimant turns out to

be the actual owner of the property.” $557,933.89, 287

F.3d at 77. Accordingly, proof of actual ownership is

relevant only in cases where the government satisfies

its merits burden and the claimant is called upon to

prove an innocent-owner defense. See id.

The rule applied by the Ninth Circuit, in short,

“prevent[s] every person unwilling to completely

explain his relationship to property that he claims to

own,” and that he has provided evidence of owning,

29

“from merely contesting [its] forfeiture.” $148,840.00,

521 F.3d at 1276. That cannot be the law.

3. In fact, the decision below “runs the danger of

impermissibly shifting the merits burden to the

claimant.” $17,900.00, 859 F.3d at 1091. Requiring

claimants to explain how they acquired ownership

“effectively shift[s] the burden of proof from the

government back to the claimant” to prove the

“property is not subject to forfeiture.” United States v.

Funds in Amount of $239,400, 795 F.3d 639, 646 (7th

Cir. 2015). It is tantamount to requiring that a

claimant prove legitimate ownership—i.e., “that her

property is unconnected to unlawful activity,” when it

is the government’s burden to prove it is connected to

unlawful activity. $17,900.00, 859 F.3d at 1091. That

burden-shifting is especially inappropriate given “the

limited opportunity claimants often have to develop

the record” before the government moves to strike

their claim. Id.

This case is a good illustration. The government

speculates that the 1HQ3 bitcoin was stolen from Silk

Road. But it has never offered admissible evidence to

support that theory. By requiring Petitioners to show

“how Ngan would have come into ownership of [that]

bitcoin,” App.6, the Ninth Circuit effectively required

Petitioners to disprove the government’s forfeiture

theory on the merits—before they could enter the case

and take discovery. That puts the cart before the

horse and excludes legitimate claimants, like

Petitioners, who plausibly assert a concrete stake in

the outcome of the forfeiture.

30

IV. There Are No Vehicle Problems.

This case is an ideal vehicle for resolving the

question presented. Appellate courts seldom have the

chance to address the government’s questionable

litigation positions in civil-forfeiture cases. Few

claimants can afford the costs of protracted litigation,

and those costs can quickly dwarf the value of the

seized property. This case thus presents a rare

opportunity to address the government’s tactics in

seeking to avoid judicial scrutiny of its forfeitures.

This case also vividly illustrates the problems

with imposing too high an evidentiary burden on

claimants on the threshold issue of standing. Because

the government moved to strike Petitioners’ claims

immediately, no discovery was allowed. It was

profoundly unfair to require Petitioners to definitively

prove their ownership of a cryptocurrency wallet when

they had had only a “limited opportunity . . . to develop

the record.” $17,900.00, 859 F.3d at 1091. Indeed, the

burden imposed by the Ninth Circuit was impossible:

Petitioners cannot be expected to explain Ngan’s

“association with Individual X,” App.6, when the

government has refused to disclose the identity of

Individual X.

The Court can decide the question presented with

the benefit of extensive briefing about that issue.

Before the district court, the parties vigorously

disputed whether there was sufficient evidence to

establish Petitioners’ standing. See D. Ct. Dkt. No. 90

at 18–21 (motion to strike); D. Ct. Dkt. No. 98 at 14–

20 (opposition); D. Ct. Dkt. No. 99 at 6–12 (reply). The

district court surveyed Petitioners’ claims and denied

standing because they did not explain “how Ngan

31

would have come into ownership of the Bitcoin in

1HQ3 wallet.” App.22. The sufficiency of Petitioners’

evidentiary showing also was the primary issue on

appeal. See C.A. Dkt. No. 22-1 at 61–64 (opening

brief); C.A. Dkt. No. 29 at 37–45 (answering brief);

C.A. Dkt. No. 39 at 8–20 (reply). And it was the

central focus of the decision below, which held that

Petitioners “failed to carry their burden” because they

“offer[ed] nothing to suggest how Ngan would have

come into ownership of the bitcoin in 1HQ3.” See

App.3–7.

This case is therefore an excellent vehicle for

considering the important question presented. The

Court should grant certiorari.

CONCLUSION

The Court should grant the petition for writ of

certiorari.

Respectfully submitted,

Rod J. Rosenstein

Counsel of Record

Kellam M. Conover

KING & SPALDING LLP

1700 Pennsylvania Avenue NW

Washington, DC 20006

(202) 737-0500

rrosenstein@kslaw.com

April 25, 2024

Counsel for Petitioners