re: Newsom signs bill into law claiming bitcoin after 3 yrs of inactivity

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If you found out your bank was giving your state government access to some accounts, would you keep your accounts there?

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Just so you know, it's almost guaranteed whatever state you're in has an unclaimed property law that already permits this.

The fricked up part is that you only get the cash value at the time of seizure, typically, so if it's an investment that would have grown otherwise, you're SOL.

It looks like Ohio is trying to use the benefits of this arbitrage to pay for the Browns' stadium

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Attorneys leading a class action lawsuit against Ohio’s new stadium funding plan have thrown their weight behind a case out of California. They’ve filed an amicus brief, urging the U.S. Supreme Court to hear a case challenging how California handles abandoned funds.

In the most recent state budget, Ohio lawmakers devised a system to use private citizens’ unclaimed funds to pay for a new Cleveland Browns stadium. Lawmakers earmarked $1 million for outreach, but there’s no explicit requirement for officials to notify individual owners before their property gets transferred.

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This article discusses some California tomfoolery, too

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In California, most unclaimed funds including old bank accounts, security deposits and unused life insurance benefits become dormant once there’s no account activity for three years. If the state controller can’t track down the rightful owner, that property gets liquidated and transferred to the state.

The court case, known as Peters v. Cohen, turns on the state’s notification requirements.

Jan Peters is German citizen, but he had an account in California holding Amazon stock. That account eventually got reported as dormant. But when the state attempted to contact Peters, the private firm it worked with changed his address in Munich, Germany to Munich, California and used a zip code of “00000.”

Munich, California doesn’t exist, and “00000” is not a valid zip code. Unsurprisingly, the notice never reached Peters, and so the controller sold his Amazon stock in July 2020. His holdings were worth $1.6 million at the time of sale. They’d be worth more than $4.2 million now.

Peters’ U.S. Supreme Court petition argues California’s statutes don’t account for reasonable investment strategies like buying and holding. And while California works hard to track down people with unpaid taxes or traffic tickets, it doesn’t go to the same lengths to return money.

The petition added California’s growing reliance on third-party firms, paid on commission, has “not only lubricate(d) the funnel for unclaimed property to slide into the coffers of the state but also increase(d) the risk of erroneous seizures.”

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Shows how bad off California is

I took a look at the law and it looks like the rightful owner will just need to go and claim the bitcoin from the State Controller's office once they are notified that the bitcoin has been deemed unclaimed after 3 years. I think it is how they do dividends, interest or any other financial account in Louisiana. I did this a few years ago with some old arse dividend from maybe Compaq.

If anything, i think the exchanges that are holding these bitcoins are going to just go down the list of owners and make sure all of their contact info is up to date.

But here's my question...how is money or crypto "unclaimed" if it's sitting in an account I own? It doesn't need to be claimed because it's already mine. That's different than say a tax refund check that doesn't get cashed or deposit that doesn't go through, or an account of a known deceased person that doesn't get transferred within 3 years.

Here are the details from Google

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Key Provisions of the Law
Dormancy Period: A crypto account is considered dormant if no activity (logins, transactions, or communication with the holder) has occurred for three consecutive years.

No Forced Liquidation: Unlike some other states, California's law explicitly prohibits the state from immediately selling the unclaimed crypto for U.S. dollars. This means owners can reclaim their assets and still benefit from any market appreciation.

State Custody: The state Controller's Office will appoint a qualified, licensed custodian to securely manage and safeguard the assets.

Reclamation: Original owners can reclaim their property from the state's unclaimed property division at any time by verifying their identity through the standard process.

Timeline for Liquidation (if unclaimed): If the assets remain unclaimed with the state for a period of 18 to 24 months, the Controller may then convert them to fiat currency.

Applies to Custodial Wallets: The law applies to assets held by third-party exchanges and custodial services, not self-hosted or hardware wallets where the user controls their own private keys.

The legislation, which was widely supported by both lawmakers and some crypto industry figures, modernizes California's existing unclaimed property laws to address digital assets

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At face value this is a blatant money grab and indicative of a government that increasingly is attempting to seize assets and property from its citizens.

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But here's my question...how is money or crypto "unclaimed" if it's sitting in an account I own?

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This has been the law for years, and not just California. The typical timeframe is 3-5 years.

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So there is a timeline to reclaim it and some people will obviously not do so for a variety of reasons. Setting an arbitrary timeline around "you have to do something with your assets within x years or we'll just take them" is insanity.

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That's been the law basically everywhere in the US for decades, already. You just seem to be finding out about the law.

And they're not taken. The liquidation means that the asset isn't held anymore. It becomes numbers in a bank account held by the state instead. You can still claim that liquidated amount, just not the actual piece of property anymore.

And, as I have already said, this presents certain issues. See the suit by the German man for an example.

I seriously hope this isn't another example of dishonest/ignorant social media content creators riling people up so much emotionally they refused ot understand relatively simple concepts.

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The problem with the law, other than requiring exchanges to hand over access to accounts, is that exchanges would need to share activity logs or reports filtered to California residents on a continuous basis, or voluntarily report inactive accounts held by Cali residents.

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Banks, brokers, insurers and so on do this in every state through the escheatment process. It is typically an annual report these institutions send to the state after. My wife and brother have done audits for local banks and they are sometimes involved reviewing this procedure.

For example a bank has to do an annual review of their accounts and if there has been no movement on an account over 3-5 years, they send a certified mail notice to the last known address of the holder of the account and if they get no response, they add it to the report they send the state. The state is then given custody of that account (i believe it still stays with the institution) and custody will be returned to the original owner if they come to the state and provide them required identification to prove ownership. Really simple process. It is good practice to search your own state's database with your name every few years.

If you look at this CA law, it is just making it so California treats bitcoins like any other abandoned bank account. I would bet almost every other state follows suit in some way. I don't defend Newsome on 99.999% of the crap he does but this is not some illegal taking that no other state does.

This property is not going to be owned by any state because as many people have pointed out, that would be unconstitutional. California and all other states just become the custodian.

PeleofAnalytics' post probably sums it up better than I could.

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Banks, brokers, insurers and so on do this in every state through the escheatment process. It is typically an annual report these institutions send to the state after. My wife and brother have done audits for local banks and they are sometimes involved reviewing this procedure.

For example a bank has to do an annual review of their accounts and if there has been no movement on an account over 3-5 years, they send a certified mail notice to the last known address of the holder of the account and if they get no response, they add it to the report they send the state. The state is then given custody of that account (i believe it still stays with the institution) and custody will be returned to the original owner if they come to the state and provide them required identification to prove ownership. Really simple process. It is good practice to search your own state's database with your name every few years.

If you look at this CA law, it is just making it so California treats bitcoins like any other abandoned bank account. I would bet almost every other state follows suit in some way. I don't defend Newsome on 99.999% of the crap he does but this is not some illegal taking that no other state does.

This property is not going to be owned by any state because as many people have pointed out, that would be unconstitutional. California and all other states just become the custodian.

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