Summary
The District of Arizona overruled Claimant Haiqiang Lu’s objection and adopted a magistrate judge’s Report and Recommendation denying his motion to dismiss a civil forfeiture action involving TetherUS and Ethereum Classic. The court held that the notice requirements of 18 U.S.C. § 983 did not apply to this judicial forfeiture proceeding, that the Government’s delayed publication of notice was reasonable under the circumstances, and that Lu had not shown a due process violation. The court also held that the sufficiency of the allegations concerning the Ethereum Classic should be resolved at trial rather than at the pleading stage.
Court
United States District Court for the District of Arizona
Jurisdiction
U.S. District Court for the District of Arizona
Decision date
March 2, 2026
Docket number
CV-23-00147-TUC-RM (MSA)
Disposition
other
Questions Presented
- Whether the Government violated 18 U.S.C. § 983 by failing to provide notice of the seizure within 60 days.
- Whether the Government violated Federal Rule of Civil Procedure 4(n), Rule 4(m), or Supplemental Rule G(4)(a)(i) by delaying service or publication of notice.
- Whether the delay between seizure, initiation of the forfeiture action, and notice violated Lu's due process rights under the Barker v. Wingo factors.
- Whether the complaint sufficiently alleged that the seized Ethereum Classic was subject to forfeiture at the pleading stage.
Holdings
- Section 983(a)(1)(A)(i)'s 60-day notice requirement applies to nonjudicial civil forfeiture proceedings, not this judicial forfeiture action. Because the property was worth approximately $2.3 million, it was generally ineligible for nonjudicial forfeiture.
- Lu did not establish a basis for dismissal under Rule 4(n), Rule 4(m), or Supplemental Rule G(4)(a)(i). Lu was not a defendant subject to Rule 4(m)'s 90-day service requirement, and the Government's delayed publication of notice was reasonable under the circumstances because the action was sealed during an ongoing criminal investigation.
- At this stage, the delay did not establish a due process violation. Applying the four Barker factors, the Government offered a sufficient justification based on its ongoing criminal investigation, Lu asserted his rights, and Lu failed to show actual prejudice resulting from the delay.
- The complaint sufficiently remained in the action at the pleading stage because the forfeitability of a portion of the property should be adjudicated at trial, not on a motion to dismiss, and the Government need not show at the pleading stage that every item of claimed property is tainted.
Court Document
Open PDFLoading document…