The Salomon Brothers Bitcoin Dusting Campaign: Novel Legal Theory or Speculative Overreach?

A Legal Analysis of Constructive Possession Claims, Abandoned Property Law, and Self-Custodial Digital Assets

Executive Summary

In summer 2025, an unknown client of Salomon Brothers Securities Inc. executed an unprecedented campaign, sending over 41,000 OP_RETURN messages to dormant Bitcoin wallets controlling approximately 2.3 million BTC (roughly 11% of Bitcoin’s circulating supply). These messages claimed “constructive possession” of the wallets and warned recipients they had 90 days to prove ownership or risk “relinquishment of all rights, title and interest” in their digital assets.

This article examines the legal viability of such claims, focusing on the fundamental incompatibility between traditional abandoned property doctrines and self-custodial cryptocurrency architecture. We conclude that while the campaign represents a creative attempt to extend property law into the digital realm, it faces arguably insurmountable legal and practical obstacles, making its success under current jurisprudence unlikely.

For the full technical analysis of the campaign, see Galaxy Digital’s comprehensive research report.

Background: The Dusting Campaign

The Mechanics

Between June and August 2025, Salomon Brothers’ client executed a sophisticated blockchain operation:

• 41,523 OP_RETURN messages sent from 3,738 sender addresses
• 39,423 recipient addresses targeted, holding 2,334,482.52 BTC combined
• 98.82% of targets were legacy P2PKH (Pay-to-Public-Key-Hash) addresses
• Average dormancy of targeted addresses: 2,171 days (~5.95 years)
• 98.1% of notified addresses had never spent coins since first receipt

The messages typically read: “NOTICE TO OWNER: see www.salomonbros.com/owner-notice” or “LEGAL NOTICE TO WALLET OWNER: Go To Webpage: salomonbros.com/legal-notice.”

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The Legal Claim

The linked webpages asserted that the client had taken “constructive possession” of wallets appearing to be “abandoned” and warned that non-responsive owners would be deemed to have relinquished their property rights. Owners were given approximately 90 days to either:

1. Cryptographically prove ownership by signing a transaction, or
2. Contact Salomon Brothers through a web form with supporting documentation

The notices referenced protecting the Bitcoin network from “rogue states and criminal organizations” with quantum computing capabilities, framing the effort as altruistic network defense. Salomon Brothers publicly announced the campaign in August 2025, stating the client’s goal was to “address the risks posed by abandoned wallets.”

Legal Analysis: Core Issues

I. The Constructive Possession Doctrine

Traditional Application

Constructive possession is a well-established legal concept allowing possession of property not in one’s direct physical control. Cornell Law School defines it as “the legal possession of an object that is not in the person’s direct physical control.” The classic example: someone with keys to a safe deposit box has constructive possession of its contents.

Critical Requirements

For constructive possession to exist, the claimant must demonstrate:

1. Dominion and control over the property
2. Knowledge of the property’s existence and location
3. Ability to reduce to actual possession at will
4. Intent to exercise control

Application to Self-Custodial Bitcoin

The Salomon client’s claim fails to satisfy these fundamental requirements:

• No dominion or control: Without private keys, there is no ability to move, spend, or otherwise control the Bitcoin. The blockchain’s cryptographic architecture makes this control mathematically impossible without the keys.
• No ability to reduce to possession: A court order cannot compel transfer of Bitcoin without the private key. Unlike tangible property that can be seized by law enforcement, or intangible property held by intermediaries that can be garnished, self-custodial Bitcoin exists in a technical paradigm where possession is inseparable from cryptographic control.
• OP_RETURN messages don’t create possession: Merely sending an on-chain message to an address does not establish any form of legal control. This would be analogous to claiming ownership of a house by taping a notice to its door—the notice itself confers no property rights.

Recent Precedent: Battle Born Investments

The litigation in Battle Born Investments Co. v. DOJ directly undermines the Salomon theory. In that case, courts rejected ownership claims over seized Bitcoin where claimants could not provide evidence beyond speculation that they owned the cryptocurrency. The Ninth Circuit required claimants to present “some evidence of ownership beyond the mere assertion” – not just claims, but actual proof of control or possession. The courts found that screenshots of public blockchain data and speculative theories of connection to Bitcoin wallets were insufficient to establish standing. By extension, OP_RETURN notices alone, without the ability to cryptographically prove control via private keys, cannot establish title or divest true owners of their property rights.

II. Abandoned Property Law Framework

State Unclaimed Property Statutes

Multiple U.S. states have enacted or proposed legislation addressing digital assets as abandoned property. These statutes generally establish:

• Dormancy periods: Typically 3-5 years of account inactivity
• Holder obligations: Businesses holding customer assets must perform due diligence
• Notice requirements: Attempts to contact owners at last-known addresses
• Escheatment: If owners cannot be located, property transfers to state custody
• Perpetual claims: Original owners can reclaim from the state indefinitely

The “Holder” Problem

Unclaimed property laws consistently define a “holder” as a business, corporation, or legal entity obligated to hold, deliver, or pay property to an owner. Typical holders include:

• Centralized exchanges (Coinbase, Kraken, Binance)
• Custodial wallet providers
• Qualified custodians and trust companies
• Broker-dealers and investment platforms

Why Self-Custody Doesn’t Fit

Self-custodial wallets present a fundamental definitional problem:

1. No third-party holder exists: The user is the only entity with access to the funds
2. Developers cannot access funds: Wallet software creators have no ability to move user assets
3. No reporting mechanism: There is no entity positioned to perform due diligence, track owner information, or remit funds to the state
4. Holder and owner are identical: If the person who holds the keys is also the owner, the concept of escheatment becomes circular and meaningless

The Salomon client cannot be a “holder” under any reasonable interpretation, as he has no pre-existing legal relationship with the wallet owners and no technical capacity to fulfill a holder’s statutory duties.

III. Jurisdictional Obstacles

Priority Rules

Under Texas v. New Jersey and its progeny, unclaimed property jurisdiction follows a hierarchy:

1. Primary: The state of the owner’s last known address
2. Secondary: If unknown or that state lacks coverage, the holder’s state of incorporation
3. Exclusions: If neither state’s statute covers the property type, there is no authority to escheat

Salomon’s Jurisdictional Deficiencies

• No owner addresses known: Bitcoin addresses are pseudonymous; all else being equal, the Salomon client has no information about owners’ physical locations
• No corporate holder to establish jurisdiction: Self-custody means there is no intermediary company (like a bank or exchange) whose location could serve as a basis for jurisdiction under the secondary priority rule
• Global asset, local law: Bitcoin operates on a borderless, decentralized network; U.S. state law cannot compel actions by foreign users or non-U.S. entities
• State-by-state variation: Even within the U.S., not all states recognize digital assets as escheatable property, requiring individualized analysis of 50+ jurisdictions

Geographic Limitations

The campaign’s global reach exposes its legal vulnerability. U.S. unclaimed property statutes carry no extraterritorial force. A significant percentage of Bitcoin holders likely reside outside U.S. jurisdiction, and even identifying their location would require breaking blockchain pseudonymity—a practical and legal impossibility in most cases.

IV. The Enforcement Gap

The Private Key Imperative

Bitcoin’s technical architecture creates an absolute requirement: no private key, no possession. This is not merely a practical obstacle but a mathematical certainty guaranteed by elliptic curve cryptography.

Even if a court were to rule in favor of the Salomon client and declare certain Bitcoin “abandoned,” the court could not:

• Order the Bitcoin network to transfer the coins (no central authority exists)
• Compel the Bitcoin protocol to recognize the claim (“code is law”)
• Physically seize the assets (they exist only as cryptographic entries on a distributed ledger)

Limited Remedies

The only potential remedy would be a court order compelling an identified individual to surrender their private key. This remedy likely fails on several potential fronts because:

1. Most addresses are pseudonymous: No identifiable person can be served with process
2. Long-dormant wallets: Owners may be deceased, incapacitated, or truly lost their keys
3. International owners: Likely beyond reach of jurisdiction
4. Fifth Amendment concerns: Compelling disclosure of a private key may implicate constitutional protections against self-incrimination in certain contexts

V. Notice Deficiencies

Even accepting arguendo that some legal framework could apply, the Salomon notices themselves suffer from multiple defects:

Procedural Irregularities

1. Broken links: Initial messages contained non-functional URLs (owner_notice vs. owner-notice)
2. Insufficient grace periods: 3,203 addresses received fewer than 90 days’ notice despite promises otherwise
3. Inconsistent targeting: Failed to notify P2PK addresses (actually more vulnerable to quantum attack) while claiming to protect the network
4. No traditional notice: Unclaimed property law requires mail to last-known physical addresses; on-chain messages are untested substitutes

Strategic Inconsistencies

The campaign’s execution raises questions about its stated altruistic purpose:

• Why target less vulnerable addresses? P2PKH addresses that never spent coins have unexposed public keys and are thus less vulnerable to quantum attack than P2PK addresses
• Why gradual deployment? A genuine warning would send all notices simultaneously, not scale up over a month as media attention grew
• Why assert ownership? If the goal were network protection, why claim “constructive possession” rather than simply alerting holders to transfer to more secure wallets?
• Contradictory messaging: Salomon’s public statement emphasizes protecting “the millions of wallets that are not abandoned,” yet the notices threaten legal action against non-responsive owners

These inconsistencies suggest the campaign’s true purpose may have been to establish a factual record for future litigation rather than genuine concern for network security.

Potential Legal Strategies and Vulnerabilities

What Salomon’s Client May Be Attempting

The campaign appears designed to potentially create a litigation foundation under novel legal theories. According to Salomon’s press release, the client claims to be addressing network security risks, asserting that “rogue states and criminal organizations with significant resources pose a credible threat to hack assets held in abandoned digital wallets.”

However, the campaign’s actual structure suggests more complex motivations:

Strategy 1: Establish Notice Record

By creating a permanent, timestamped record on the blockchain, the client may argue that he provided legally sufficient notice to all wallet owners. If coins subsequently move to a centralized custodian, client might claim:

• Prior abandonment was established through lack of response to notices
• The current custodian holds property subject to the client’s prior claim
• Jurisdiction attaches through the custodian’s location

Strategy 2: Induce Self-Selection

The notices may be designed to coax responses that create litigation opportunities:

• Dormant holders who respond reveal they still control the keys (defeating abandonment claims)
• Those who move coins to custodians create potential venues for legal action
• Those who submit forms provide information that could support jurisdictional claims

Strategy 3: Novel Statutory Interpretation

The client may seek courts to extend abandoned property statutes in unprecedented ways:

• Argue that blockchain notices satisfy statutory due diligence requirements
• Claim that self-custodial wallet users are “holders” of their own property (circular as this seems)
• Assert that dormancy alone, regardless of ability to possess, creates escheatable property

Why These Strategies Likely Fail

Fundamental Legal Barriers

1. No legal mechanism for forced transfer: Absent private keys, no court order can easily effectuate possession
2. Battle Born precedent: Supreme Court requires actual control, not speculative claims
3. Statutory definitions don’t fit: Self-custody falls outside “holder” definitions in all existing statutes
4. Constitutional concerns: Attempting to divest property rights based solely on inactivity without traditional due process may violate the Takings Clause and Due Process Clause

Practical Impossibilities

Even if legal barriers could be overcome:

• Cannot identify most owners: Pseudonymous addresses prevent service of process
• Cannot compel key disclosure: No mechanism to force revelation of private keys from unknown parties
• Cannot access the Bitcoin: Technical architecture prevents any forced transfer
• Global enforcement impossible: Lack of international jurisdiction over most holders

Open Questions and Future Implications

Unresolved Legal Issues

This campaign raises novel questions that remain unanswered:

1. Can blockchain messages constitute legal notice?

Courts have not addressed whether OP_RETURN transactions satisfy statutory notice requirements. Traditional unclaimed property law requires attempts at physical mail to last-known addresses. Can a blockchain message to a pseudonymous address suffice? Arguments exist on both sides:

• For: Blockchain provides immutable, timestamped proof of notice to the actual property location
• Against: Notice must reach the actual person, not merely their digital property; blockchain addresses don’t identify individuals

2. Does dormancy alone create abandonment?

Traditional property law requires both intent to abandon (animus derelinquendi) and physical relinquishment. Mere non-use typically doesn’t suffice. For Bitcoin:

• Many dormant wallets represent long-term investment strategies (“HODLing”)
• Keys may be in secure cold storage, accessed infrequently by design
• Lack of transactions doesn’t indicate intent to abandon

3. How do unclaimed property laws apply to bearer instruments?

Bitcoin shares characteristics with bearer bonds or physical cash—possession via control rather than registration. Unclaimed property laws developed primarily for registered securities and bank accounts. The application to bearer-like instruments remains unclear.

4. What duties does a state have if it “receives” Bitcoin it cannot access?

If a court somehow ordered escheatment of Bitcoin without private keys, the state would hold a legally recognized property interest but no practical ability to exercise it. This creates bizarre scenarios:

• State claims ownership but cannot prevent true owner from later using keys
• State cannot liquidate or safekeep the asset as statutes contemplate
• Original owner returns to find state cannot return what it never actually possessed

Implications for the Cryptocurrency Industry

For Self-Custodial Wallet Users

This campaign highlights risks that extend beyond its legal merits:

1. Operational security: Dormant wallets may attract unwanted attention from parties seeking legal theories to claim them
2. Proof of life: Periodic small transactions may serve to demonstrate ongoing control and intent not to abandon
3. Estate planning: Cryptocurrency holders should ensure proper documentation of private keys for heirs to prevent actual loss

For Custodial Services

Centralized exchanges and custodians face potential exposure:

1. Deposits of previously “noticed” coins: If users deposit Bitcoin that received Salomon-type notices, custodians could face competing claims
2. Enhanced due diligence: May need to track whether deposited coins have been subject to abandonment claims
3. Jurisdictional complications: Must navigate varying state laws regarding digital asset escheatment

For Legislators and Regulators

The campaign exposes gaps in existing legal frameworks:

1. Need for clarity: States should explicitly address whether self-custodial assets fall within unclaimed property statutes
2. Notice requirements: If blockchain-based property is subject to abandonment laws, appropriate notice mechanisms must be defined
3. Technical realities: Law must account for the fact that cryptographic control is inseparable from possession

Quantum Computing and Network Security

Salomon justified the campaign partially on quantum computing threats. This raises legitimate questions:

Real Risks

• Quantum computers may eventually be able to derive private keys from public keys
• P2PK addresses (with exposed public keys) are most vulnerable
• Timeline estimates vary: possibly late 2020s to 2040s or later

Legal Responses

If quantum threats materialize:

1. Protocol upgrades: Bitcoin could implement quantum-resistant cryptography
2. Voluntary migration: Holders could move to quantum-safe addresses
3. Statutory interventions: Legislatures might create frameworks for quantum-vulnerable abandoned wallets

None of these scenarios support the Salomon client’s constructive possession theory, but they highlight that the intersection of cutting-edge technology and property law will continue to generate novel legal challenges.

Conclusion: Legal Analysis and Recommendations

Legal Viability Assessment

The Salomon Brothers client’s attempt to claim constructive possession of dormant Bitcoin wallets through OP_RETURN notices faces overwhelming legal obstacles:

Fatal Defects:

1. No possession without private keys: Constructive possession requires ability to reduce to actual possession; cryptographically impossible without keys
2. No statutory holder: Self-custodial architecture doesn’t fit unclaimed property law’s framework requiring intermediary holders
3. Jurisdictional failures: Cannot establish jurisdiction over pseudonymous, potentially foreign wallet owners
4. Enforcement impossibility: Even a favorable judgment cannot compel transfer without private keys
5. Precedential barriers: Battle Born and related forfeiture cases require actual evidence of ownership and control beyond mere assertions or speculation

Likely Outcomes:

• Courts would reject claims outright for lack of standing and inability to provide effective relief
• Any litigation would fail at the pleading stage for failure to state a claim
• Publicity may have been the actual goal, with legal claims serving as pretext

Practical Implications for Cryptocurrency Holders

Despite low probability of legal success, the campaign creates practical concerns:

Recommended Actions for Holders:

1. Demonstrate control: Consider periodic small transactions to show active control and negate abandonment arguments
2. Monitor addresses: Track any unusual transaction activity, including dust attacks or OP_RETURN messages
3. Document ownership: Maintain records linking physical identity to addresses for estate planning and potential legal disputes
4. Upgrade security: Consider moving funds from older address types (P2PKH) to newer, quantum-resistant formats as they become available
5. Avoid centralized deposits of “noticed” coins: If funds received abandonment notices, depositing them with custodians could trigger legal disputes

Guidance for Legal Practitioners

Attorneys advising clients in this space should:

For Clients Holding Dormant Bitcoin:

• Emphasize that OP_RETURN notices likely have no legal effect on properly secured self-custodial assets
• Recommend periodic transactions to demonstrate ongoing control
• Prepare estate planning documents that address cryptocurrency holdings
• Document that dormancy reflects investment strategy, not abandonment

For Custodial Platforms:

• Develop policies for handling deposits of coins that received public abandonment notices
• Consider enhanced due diligence for large deposits of long-dormant coins
• Monitor legislative developments regarding digital asset escheatment
• Maintain clear terms of service addressing unclaimed property procedures

The Broader Legal Landscape

This episode illuminates a fundamental tension between 19th-century property law concepts and 21st-century cryptographic property systems. Several principles emerge:

1. Code as Law vs. Legal Code

Bitcoin’s protocol operates according to mathematical rules that are indifferent to legal pronouncements. Traditional legal mechanisms for transferring property rights—court orders, liens, garnishments—don’t function the same way in a system where possession is synonymous with cryptographic control.

2. Pseudonymity Challenges Traditional Legal Process

The legal system relies on identifying parties, serving process, and enforcing judgments against known individuals. Pseudonymous blockchain addresses frustrate these fundamental requirements, creating an enforcement gap that law has not yet bridged.

3. Need for Tailored Frameworks

Extending abandoned property laws—designed for bank accounts, securities, and tangible assets—to self-custodial cryptocurrency is like forcing a square peg into a round hole. Purpose-built legal frameworks are needed that account for:

• Cryptographic control as the sole form of possession
• Pseudonymous ownership structures
• Global, borderless nature of blockchain assets
• Technical impossibility of forced transfers without keys

Final Assessment

The Salomon Brothers campaign, while creative and technically sophisticated, represents legal speculation rather than sound doctrine. It exploits genuine ambiguities in how property law applies to cryptocurrency, but likely cannot overcome the fundamental incompatibility between traditional legal concepts of possession and Bitcoin’s cryptographic architecture.

For the cryptocurrency community, this episode serves as a reminder that the intersection of law and blockchain technology remains unsettled. While this particular legal theory is unlikely to succeed, it foreshadows future attempts to extend traditional legal frameworks into the digital realm—attempts that will require careful analysis by courts, legislators, and practitioners.

The campaign’s lasting impact may not be its legal claims, but rather the questions it raises: How should property law adapt to cryptographic assets? What constitutes adequate notice in a pseudonymous system? When does dormancy indicate true abandonment versus prudent long-term holding? These questions will shape cryptocurrency jurisprudence for years to come.

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About LexoCrypto™

LexoCrypto™ @ RICHT provides sophisticated legal counsel at the intersection of law and blockchain technology. We combine technical understanding of cryptographic systems with experience in property law, securities regulation, and digital asset compliance. We counsel clients ranging from individual cryptocurrency holders to exchanges, protocols, and institutional investors navigating the evolving legal landscape of digital assets.

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Further Reading:

• Galaxy Digital’s Full Technical Analysis
• Salomon Brothers’ Official Press Release
• Salomon’s Website Statement on the Campaign
• More Insights from Richt Law Firm

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This article is provided for informational purposes only and does not constitute legal advice. The analysis presented reflects our understanding of the state of law as of October 2025 and may not account for subsequent developments. Readers should consult with qualified legal counsel regarding specific situations.