Court Asks Where Bitcoin Authority Documented

Court Documentation Requirements for Custody Authority

This memo is published by CustodyStress, an independent Bitcoin custody stress test that produces reference documents for individuals, families, and professionals.

What Courts Require

Legal proceedings require documentation. When disputes arise over bitcoin—who owns it, who can access it, who has authority to act—courts ask for evidence. The question is direct: where is this authority documented? When a court asks where bitcoin authority documented, it demands what the legal system relies upon to resolve competing claims: written records that establish who has rights and powers over the asset. Verbal agreements, informal understandings, and technical possession of keys do not satisfy this demand.

This analysis covers what happens when custody arrangements designed for personal use encounter the documentation requirements of legal proceedings. Many bitcoin holders operate their custody arrangements through unwritten understandings that work well during normal life but provide nothing when a court needs to determine who has legitimate authority. The court's question exposes a gap between how custody functions technically and how authority must be proven legally.

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What Courts Require

Courts operate through evidence—documents, testimony, and records that can be examined, challenged, and weighed. A claim of authority over bitcoin must be supported by something a court can evaluate. Saying "I own this bitcoin" invites the response: prove it. Saying "she authorized me to manage this" invites the response: show us the document that grants that authorization. The burden of proof falls on whoever makes the claim, and the standard requires evidence beyond mere assertion.

Traditional assets come with built-in documentation infrastructure. Bank accounts have statements and signature cards. Real estate has deeds recorded with government offices. Securities have brokerage records and transfer agents. When disputes arise over these assets, courts can request and examine records from institutions that maintain them. Someone claiming authority can point to specific documents created and maintained through established systems.

Self-custody bitcoin lacks this infrastructure entirely. No institution maintains records of who owns which addresses. No registry tracks who has legitimate authority to move specific bitcoin. The blockchain records transactions but not the agreements or circumstances that gave rise to those transactions. Courts looking for the documentation they expect from other asset classes find nothing—or at most, fragmentary records the holder created themselves without any third-party verification or institutional backing.

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Contexts Where the Question Arises

Probate proceedings generate documentation questions when bitcoin is among estate assets. The executor must prove authority to administer the estate and account for how assets were handled. If bitcoin is listed on the estate inventory, the court may ask how ownership is established, how the executor accessed it, and what documentation supports the executor's authority over this particular asset. Letters testamentary establish general authority over estate assets but may not specifically address bitcoin.

Divorce and separation create adversarial contexts where parties challenge each other's claims. One spouse claims the bitcoin belongs to them individually; the other claims it is marital property. One spouse claims authority to have moved bitcoin during separation; the other claims that movement was unauthorized. Courts must determine whose claims are valid, and the first step in that determination is examining whatever documentation supports each party's position. Absent documentation, courts must rely on testimony—which often conflicts.

Business disputes bring their own documentation demands. Partners disagree about who controls bitcoin held for business purposes. Investors claim rights to bitcoin that founders claim belongs to them personally. Creditors seek to reach bitcoin that debtors claim is held on behalf of others. Each scenario involves competing claims, and courts resolve competing claims by evaluating evidence. Documentation created at the time of the relevant events carries more weight than retrospective explanations offered during litigation.

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What Undocumented Arrangements Look Like to Courts

Undocumented claims appear suspicious to courts trained to evaluate evidence. A party who claims authority but cannot point to any document establishing that authority faces skepticism. Why was nothing written down if the arrangement was legitimate? The absence of documentation, which may simply reflect casual personal practices, can be interpreted as evidence that the claimed arrangement did not exist or that the party is fabricating claims to serve their current interests.

Testimony about undocumented agreements often conflicts between parties. One person remembers an arrangement one way; another remembers it differently; a third does not remember it at all. Without documentation to anchor the facts, courts must assess credibility based on witness demeanor, consistency, and plausibility. This credibility contest may have nothing to do with the actual facts and everything to do with who presents better in the courtroom. Documentation would have made the determination straightforward; its absence makes the determination uncertain.

Technical possession of keys does not prove legitimate authority. Someone who holds the seed phrase can move bitcoin, but that capability does not establish whether they have the right to move it. A thief who steals a seed phrase has technical access without legal authority. A family member who received emergency access has technical capability but may lack authority to use it for their own benefit. Courts understand that having possession of something does not prove ownership or authorized control, particularly when that possession is not documented.

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Types of Documentation Courts Recognize

Wills and trust documents establish authority for estate and inheritance purposes. If a will specifically addresses bitcoin and designates who receives it, that document provides the authority courts need to determine proper distribution. If a trust document names a trustee with authority over bitcoin held in the trust, that naming creates documented authority the trustee can present. These documents work because courts understand them, know how to evaluate their validity, and have centuries of precedent for interpreting them.

Powers of attorney establish authority for someone to act on behalf of another during their lifetime. If a power of attorney grants an agent authority over financial assets, that document may provide authority over bitcoin depending on its language and scope. Courts examine the document's terms, determine whether it covers the asset and action in question, and assess whether it was properly executed. The document itself provides the evidence the court requires.

Contracts and agreements between parties document authority in commercial and personal contexts. If parties agreed that one of them would manage bitcoin on behalf of both, a written agreement memorializing that arrangement provides documentation courts can evaluate. The agreement may be imperfect—ambiguously worded, unsigned, or incomplete—but it provides something where nothing else exists. Courts prefer flawed documentation to no documentation at all because flawed documentation still anchors the factual inquiry.

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The Problem of Retrospective Documentation

Documentation created after a dispute arises carries less weight than documentation created before. A letter explaining that certain arrangements existed, written after those arrangements became contested, looks like self-serving fabrication rather than contemporaneous evidence. Courts distinguish between documents that reflect understandings at the time they were formed and documents created to support positions in litigation. The latter receive skeptical treatment regardless of their accuracy.

Declarations and affidavits can provide sworn testimony about past arrangements, but they still represent claims rather than proof. Someone swearing that an undocumented agreement existed is simply asserting under oath what they already claimed—the oath adds solemnity but not independent evidence. If the other party files a contradictory declaration, the court faces the same credibility contest it would face with live testimony. Contemporaneous documentation would have resolved the factual question; retrospective declarations perpetuate it.

Even honest attempts to reconstruct past arrangements face suspicion when timing suggests litigation motivation. Perhaps the holder genuinely intended to document their custody arrangements but never did. Perhaps they are now trying to correct that oversight by creating documentation that accurately reflects what they always understood. Courts cannot easily distinguish belated but accurate documentation from fabricated documentation created to win a dispute. The timing undermines whatever the documentation might otherwise establish.

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Technical Authority Versus Legal Authority

Blockchain systems recognize cryptographic authority—whoever can sign with valid keys has control. Legal systems recognize documented authority—whoever can prove legitimate rights has authority the law will enforce. These two forms of authority operate independently and may conflict. Someone with cryptographic authority but no legal authority can move bitcoin but may face legal consequences for doing so. Someone with legal authority but no cryptographic capability can obtain court orders that have no effect on the blockchain.

Courts cannot compel the blockchain to recognize their rulings. A court can order that certain bitcoin belongs to a particular party, but that order does not move the bitcoin. If the party who controls the keys refuses to comply with the order, the court must use other enforcement mechanisms—contempt sanctions, asset seizures, judgments—that operate outside the blockchain. The technical reality of bitcoin control and the legal reality of documented authority exist in parallel without automatic connection.

This parallel existence creates situations where legal authority and technical control reside in different hands. A court determines that one party has legal authority over disputed bitcoin, but another party controls the keys and claims they lost them or do not know the passphrase. The legally-authorized party has a judgment they cannot easily enforce. The technically-controlling party can ignore legal authority if they are willing to accept the legal consequences or believe those consequences can be avoided. Documentation of authority matters for legal purposes but does not itself provide technical control.

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Scenarios of Documentation Failure

An executor administering an estate that includes bitcoin presents letters testamentary to the probate court, establishing authority over estate assets generally. A beneficiary challenges the executor's handling of the bitcoin, claiming the executor transferred it to themselves improperly. The court asks the executor to document their authority over the specific bitcoin and their basis for the transfer. The executor has no documentation beyond the general letters testamentary—nothing showing the deceased owned the bitcoin, nothing showing proper valuation, nothing showing authorized distribution. The challenge proceeds based on the executor's testimony alone, which may or may not be believed.

In a business dissolution, partners disagree about bitcoin held in a company wallet. One partner claims authority to have moved the bitcoin during the dissolution process; another claims that movement was unauthorized conversion. Neither partner can produce documentation establishing who had authority to control the company's bitcoin or what procedures governed its disposition. The court must determine from conflicting testimony whose version of events is accurate. Years of undocumented operation now create months of litigation because nothing was written down when the arrangements were functioning smoothly.

Heirs dispute who was supposed to receive bitcoin from a deceased relative. The deceased mentioned different plans to different family members at different times. No will addresses the bitcoin specifically; the generic estate distribution language is ambiguous about whether bitcoin counts as personal property, financial assets, or something else. Each heir interprets the deceased's statements and the estate documents to favor their own claim. The court asks where the deceased's intentions regarding the bitcoin are documented and receives only contested interpretations of documents that do not actually answer the question.

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Assessment

When a court asks where bitcoin authority documented, it poses a question that informal custody arrangements often cannot answer satisfactorily. Courts require evidence to resolve disputes, and the evidence they find most persuasive takes the form of contemporaneous documentation—written records created at the time arrangements were made, establishing who has what rights and powers. Verbal understandings, assumed agreements, and technical key possession do not satisfy this evidentiary need.

Self-custody bitcoin exists outside the external infrastructure that provides automatic documentation for traditional assets. No bank maintains records of bitcoin ownership; no registry tracks authorized control. Whatever documentation exists must have been created by the parties themselves, and many bitcoin holders operate without creating any. This works during normal life when no one challenges their authority, but fails when disputes arise and courts require proof.

The question exposes a fundamental tension between how bitcoin custody functions technically and how legal systems determine legitimate authority. Technical control requires keys; legal authority requires documentation. Neither provides the other. Someone with keys may lack documented authority; someone with documented authority may lack keys. Courts recognize documented authority as the basis for legal determinations, making the holder's answer to "where is this documented" decisive regardless of who actually holds the cryptographic materials.

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System Context

Examining Bitcoin Custody Under Stress

What Legal Documents for Bitcoin

Bitcoin Estate Documents Needed

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