A recent federal decision in Boston underscores the strict and often unforgiving deadlines that govern federal civil forfeiture actions, especially in cases involving digital assets. The ruling arose from a forfeiture action tied to a cryptocurrency scam that defrauded a Massachusetts resident of more than $400,000. Federal investigators traced a portion of the stolen funds to a Binance Capital Management account belonging to Hong Kong resident Chew Ja Zheng. Although the government never alleged that Zheng was involved in the underlying fraud, agents seized more than $1 million in cryptocurrency from his account in 2024. Under federal forfeiture rules, Zheng had 35 days to file a verified claim after receiving emailed notice from the government, but he failed to do so.
In his attempt to reverse the default, Zheng argued that the emailed notice landed in his spam folder and that coordinating counsel across time zones contributed to the delay. After Zheng eventually retained local Boston counsel, he waited an additional 53 days before filing a motion to submit an untimely claim. This was an extended delay that ultimately proved fatal. The government opposed the request, and U.S. District Court Judge Nathaniel M. Gorton applied the “good cause” standard used for setting aside default judgments. Weighing willfulness, prejudice to the government, and whether the claimant had a potentially valid defense, the judge found that Zheng’s explanations failed to justify the prolonged delay.
Gorton’s decision highlights a recurring problem in digital asset forfeiture cases: procedural missteps can overshadow questions about innocence or ownership. As the court noted, even if the missed email were taken at face value, it did not explain why Zheng waited weeks after discovering the forfeiture to take action. The court found that this delay increased litigation costs, risked setting a harmful precedent for future forfeiture cases, and showed insufficient diligence to warrant relief.
Criminal defense attorney Vikas S. Dhar of Dhar Law in Charlestown emphasized the broader implications of the ruling. Gorton’s decision, he notes, is a prime illustration of how “unforgiving” federal civil forfeiture deadlines are. “This outcome matters because Zheng’s case highlights a recurring tension in cryptocurrency-related forfeitures,” Dhar explains. “Innocent owners can lose large sums merely because of missed deadlines, even when law enforcement agrees they were not involved in the underlying crime. International claimants are at particular risk, since notice often arrives electronically, across time zones, across languages, and sometimes through counsel unfamiliar with U.S. forfeiture rules.”
As cryptocurrency continues to rise in global financial markets, forfeiture actions involving digital assets are becoming more frequent, and more complex. The Zheng case serves as a cautionary reminder: procedural rules in federal forfeiture cases can be as consequential as the facts, and innocent owners who fail to act promptly may face irreversible losses. For lawyers advising clients with international ties or digital holdings, the decision reinforces the need for vigilance and timely action when responding to government seizure notices.
