Forfeiture – Delay – Good cause

Listen to this article

Where a claimant has moved for leave to file an untimely claim in a civil forfeiture action, the motion should be denied because there is no good reason for the claimant’s dilatory conduct.

“The facts underlying this forfeiture action describe a financial scam in which a 51-year-old Massachusetts resident was defrauded of over $400,000 of cryptocurrency. The government traced that cryptocurrency to two accounts on Binance Capital Management Co., Ltd. (‘Binance’), a popular cryptocurrency exchange and custodian that allows users to buy, sell and store digital assets. …

“One such account was held in the name of Chew Ja Zheng, a resident of Hong Kong, China. …

“The government filed its complaint against the two Binance accounts in March, 2024, and the Court issued a Warrant and Monition in June, 2024. The government notified Zheng of the action, via a copy of the warrant sent to Zheng ‘ s email address, on November 21, 2024. The notice informed Zheng that he had 35 days from receipt of the notice to file a verified claim to the cryptocurrency.

“On January 10, 2025, (50 days later) Zheng notified the government, through Boston-based counsel, that he intended to assert an interest in the asset. On March 4, 2025, 103 days after the government’s notice, Zheng moved the Court for leave to file an untimely verified claim. The government timely opposed that motion. …

“Whether good cause exists is not a mechanical determination and the Court may consider all relevant factors. Indigo Am., Inc. v. Big Impressions, LLC, 597 F.3d 1, 3 (1st Cir. 2010). Typically, three factors are most instructive: 1) whether the error was willful, 2) whether allowing the motion would prejudice the adversary, and 3) whether a meritorious defense or claim is presented. …

“Zheng asserts that there is good cause for his delinquency for two reasons. First, he avers that the email notice ended up in his spam folder and that he only discovered the forfeiture action after contacting Binance and retaining Hong Kong counsel. Next, he proclaims that communication between his local counsel and his Hong Kong counsel was made difficult by the severe time difference between the two cities.

“Based on these facts, the first factor of the good cause analysis favors the government. Even if the Court accepts Zheng’s explanation as true, there is no good reason for the delay between notifying the government of Zheng’s intention to assert a claim and actually doing so. Local counsel had been retained and the government’s notice had been recovered from Zheng’s spam by at least January 10, 2025. The relatively simple claim form was filed 53 days later and no amount of communication difficulty across time zones credibly explains that delay.

“The second factor also favors the government. While the claim was filed 53 days after Zheng’s counsel notified the government of his intent to do so, it was filed 103 after service was affected. Such dilatory conduct does increase the cost and inconvenience of litigation to the government. Furthermore, to allow the willful avoidance of court deadlines would set a bad precedent.

“Finally, it is not at all clear that Zheng’s claim has any merit but, in any event, the adverse findings as to the first two factors are deemed conclusive here.”

United States v. 299,457.4 USDC, et al. (Lawyers Weekly No. 02-623-25) (5 pages) (Gorton, J.) (Civil Action No. 24-10624-NMG) (Nov. 17, 2025).

Click here to read the full text of the opinion.