The Digital Chamber, an advocacy group for the blockchain, Bitcoin, and the digital asset industry, has asked a New York court to throw out a lawsuit that is trying to claim ownership of thousands of inactive Bitcoin wallets.

The digital asset industry group, focused on lawmaking, education, and community, says the case could have serious effects on the rights of people who keep their bitcoin in self-custody wallets.

The Digital Chamber recently filed an amicus brief, which is a legal document submitted by someone who is not directly involved in a case but wants to help the court understand the issue.

The group asked the New York State Supreme Court to reject the lawsuit. It said that calling inactive Bitcoin wallets "abandoned property" could weaken the rights of bitcoin owners.

The original lawsuit was filed in May by a person using the name Noah Doe and two companies based in Wyoming. They argue that 39,069 Bitcoin wallet addresses have been inactive for so long that they should now be treated as abandoned property under New York law.

The wallets are believed to hold about 3.8 million bitcoin, worth around $230 billion at current prices. The list also includes wallet addresses that many people believe are connected to Bitcoin creator Satoshi Nakamoto.

The Digital Chamber says the lawsuit is based on the wrong legal idea.

In its court filing, the group warned that treating inactive self-custody wallets as abandoned property would create a "pervasive cloud on title across self-custody wallets."

The organization also said that such a decision could weaken the basic rules of digital asset ownership. It warned that the effects could spread beyond the Bitcoin industry and even affect traditional financial markets.

"The plaintiffs ask to be awarded ownership of hundreds of billions of dollars in digital assets because those assets have not moved or been spent," the brief says.

The Digital Chamber said that just because bitcoin has not been moved for many years does not mean its owner has given it up. Many investors purposely leave their bitcoin untouched for long periods as a long-term investment.

The group also pointed out that the people behind the lawsuit do not own the wallets and do not have the private keys needed to access the bitcoin. The filing also questioned what the plaintiffs could actually do if they won the case.

"The declaration the plaintiffs seek would grant paper title unconnected to either possession of or access to the property it purports to convey," the brief says.

This means that even if the court gave them legal ownership on paper, they still could not access or move the bitcoin without the private keys that control the wallets.

That would still create a dangerous precedent. If the court grants the plaintiffs legal rights to the Bitcoin, even though they cannot move or spend it themselves, they could claim ownership and seize the funds once the original owners transfer the BTC to an exchange.

According to court documents, Noah Doe says he created an algorithm that searched the Bitcoin blockchain for inactive wallet addresses.

He copied the public blockchain information onto USB drives, gave them to a New York Police Department precinct, and received property receipts. He argues that this means he legally "found" the property under New York law.

The plaintiffs also sent messages to the wallet addresses using Bitcoin's OP_RETURN feature. The notices gave owners 90 days to move their bitcoin or show activity. Wallets that stayed inactive after that period were included in the lawsuit.

The message links to a page on Salomonbros.com, but it appears that the page has since been taken down.

The Digital Chamber disagreed with this argument. It said the plaintiff only copied information that is already publicly available on the blockchain and did not actually find abandoned property.

More people have also challenged the lawsuit.

Bitcoin lawyer Ian Cohen has asked the court for permission to take part in the case. He argues that laws written for lost physical property should not be used for Bitcoin wallets. He also says that if digital assets were ever considered abandoned, they would belong to the state, not to a private person.

Another challenge came from someone using the name John Doe 33. The person told the court that they control one of the wallet addresses listed in the lawsuit.

They argued that Bitcoin addresses are simply pieces of data and cannot be sued like people or companies. At the same time, activity on the Bitcoin blockchain has raised more questions about the lawsuit.

Galaxy Digital's head of research, Alex Thorn, said that at least 31 wallet addresses listed in the lawsuit moved a total of 17,527 bitcoin during June. Earlier this year, only five wallets had moved a combined 4,834 BTC.

One of the wallets, known as "1KV47," transferred 30 BTC worth about $1.88 million after being inactive since August 2011. This suggests that at least some of the wallets are still controlled by their original owners.

The court has temporarily paused the case to give more wallet owners a chance to respond. A hearing is scheduled for July 14, when the court will consider the arguments made by the Digital Chamber and other people opposing the lawsuit.