Matlack v. Baird - Cryptocurrency Larceny Claim Excepted from Discharge

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April 15, 2026 Get Citation Alerts Download PDF Add Note

In re: Adam Keiran Matlack v. Christie Baird

United States Bankruptcy Court, S.D. Texas

• Citations: None known
• Docket Number: 25-03302

• Precedential Status: Unknown Status

• Opinion

• Authorities (8)

• Cited By (0)

• Summaries (0)

• Similar Cases (2.3K)

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Trial Court Document

April 15, 2026
Nathan Ochsner, Clerk
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

IN RE: §
§ CASE NO: 25-30348
ADAM KEIRAN MATLACK, §
§ CHAPTER 13
Debtor. §
§
CHRISTIE BAIRD, §
§
Plaintiff, §
§
VS. § ADVERSARY NO. 25-3302
§
ADAM KEIRAN MATLACK, §
§
Defendant. §

MEMORANDUM OPINION
Plaintiff Christie Baird seeks a judgment that her claim against
Debtor Adam Matlack is excepted from discharge under section 523 of
the Bankruptcy Code.1 For the reasons explained below, Ms. Baird’s
claim against Mr. Matlack is excepted from discharge as a debt arising
from larceny. The Court will hold a separate evidentiary hearing on
damages.

1 ECF No. 23.
BACKGROUND
Christie Baird and Adam Matlack first met in 2012 when Ms.
Baird started attending Clearpoint Baptist Church in Pasadena, Texas.2
At the time, Mr. Matlack was an assistant pastor at the church.3 Ms.
Baird regularly attended Bible study/home group meetings at Fred
Matlack’s (Mr. Matlack’s Father’s) home and got to know Mr. Matlack
better through those meetings.4
Mr. Matlack was an early cryptocurrency enthusiast who has
been involved in cryptocurrency since at least 2013.5 Mr. Matlack
frequently discussed cryptocurrencies with members of the church
community and touted cryptocurrency as a good investment
opportunity.6
Following the death of her husband in 2014, Ms. Baird sought to
invest in cryptocurrency, specifically Bitcoin.7 In 2017, Ms. Baird
reached out to Mr. Matlack requesting that he purchase Bitcoin on her
behalf and hold it for her as an investment.8 Mr. Matlack agreed, and
Ms. Baird wired him $80,000.00 from her late husband’s bank account
on November 28, 2017.9 Although Ms. Baird and Mr. Matlack did not
enter into any written contract reflecting their agreement, it is

2 ECF No. 88, at 21 ¶¶ 3−6.
3 Id. ¶¶ 4−6.
4 Id. at 24, ¶¶ 8−14.
5 ECF No. 89, at 99 ¶¶ 9−25.
6 ECF No. 88, at 26−27.
7 Id. at 28 ¶¶ 8−18. “Bitcoin is a cryptocurrency that uses cryptographic principles to
allow owners of Bitcoin to securely transact with each other and to prove ownership of
Bitcoin via the Bitcoin Blockchain, a decentralized public ledger.” In re Orb Energy
Co., Case No. 25-80363, 2025 WL 3635773, at *1 n.7 (Bankr. S.D. Tex. Dec. 15, 2025).
8 ECF No. 88, at 28 ¶¶ 19−25, 29 ¶¶ 1−4.
9 Id. at 30 ¶¶ 2−6. See also ECF No. 58-1.
undisputed that the $80,000 was intended to be invested by Mr. Matlack
in Bitcoin to be owned by Ms. Baird.10
Shortly after Ms. Baird wired Mr. Matlack the $80,000, he
represented to her that he used her money to purchase about 8 Bitcoin
that now belonged to her.11
However, Mr. Matlack did not actually purchase Bitcoin for Ms.
Baird at that time.12 Instead, he testified that he allocated her around
7.742 Bitcoin out of his personal holdings, allegedly earmarking it as
hers in his personal account (a Coinbase account) sometime after he
received the $80,000.13 According to Mr. Matlack, this earmarking
feature, however, was discontinued by Coinbase.14 There is no written
record reflecting any earmarking.
Some years later, in 2020, Ms. Baird requested that Mr. Matlack
transfer control of her Bitcoin to her.15 The Bitcoin was intended to be
accessible only by use of passwords. To ensure that the passwords were
safe, Mr. Matlack purchased and set up a Trezor device.16 A Trezor
device is a brand of a cryptocurrency cold wallet—a piece of electronic
hardware that allows a user to store the private passwords to their
cryptocurrency offline.17 The passwords are colloquially termed “seed
words.” The seed words are stored both on a printed card and on the
electronic Trezor device. The cryptocurrency, in this case, Bitcoin, is
itself on the blockchain, but a cold wallet allows the holder to safely store

10 Id. at 33 ¶¶ 8−12; ECF No. 89, at 144 ¶¶ 8−10 (“I counted it as her [Ms. Baird’s]
Bitcoin.”) (Testimony of Adam Matlack).
11 ECF No. 88, at 34 ¶¶ 20−22.
12 ECF No. 89, at 143 ¶¶ 21−23.
13 Id. at 157 ¶¶ 4−24.
14 Id. at 164 ¶¶ 4−22.
15Id at 160 ¶¶ 24−25.
16 ECF No. 90, at 15 ¶¶ 11−21.
17 ECF No. 88, at 214 ¶¶ 5−11.
the information required to control and access their Bitcoin. Cold wallet
devices, and printed cards stored in a safe, are considered safer than
online or “hot” wallets. These methods allow users to store the
information required to access and control cryptocurrencies without
exposing their “keys” to the internet.18
The Trezor device is connected to a computer and provides a user
with access to their wallet. When a user sets up a Trezor device, the
device provides a 24 word “seed phrase” to allow users to control and
access the contents of their wallet if they lose the Trezor device. Anyone
with the seed phrase (on a printed card or otherwise) can fully restore
and control the wallet and its contents without having possession of the
Trezor device.19
Mr. Matlack first transferred a nominal amount of cryptocurrency
to the Trezor wallet as a “test transaction.”20 He alleges that he then
engaged in an escrow swap with an anonymous third party to purchase
7.742 Bitcoin.21 The Bitcoin was then transferred to Ms. Baird’s wallet
and was accessible through the Trezor device Mr. Matlack set up for
her.22
On July 30, 2020, Mr. Matlack and Ms. Baird met at a coffee shop
and Mr. Matlack gave Ms. Baird the Trezor device and the seed phrase
card, which was sealed in an envelope.23 Shortly thereafter, she
connected the Trezor device to her computer and was able to see the
7.742 Bitcoin in her account.24 For ease of reference, Ms. Baird’s account
will be referenced as her “wallet,” the term used by the witnesses. Ms.

18 Id. at 214−15.
19 Id. at 219 ¶ 25 (“not your seed, not your coins.”).
20 ECF No. 89, at 180 ¶¶ 14−19.
21 Id. at 202 ¶ 9−203 ¶ 22.
22 Id. at 202 ¶¶ 9−19.
23 ECF No. 88, at 86 ¶¶ 18−25; ECF No. 88, at 39 ¶¶ 8−23.
24 Id. at 45 ¶¶ 2−9.
Baird locked the device and the sealed seed phrase card in her home
safe.25
On or around August 2, 2020, Ms. Baird checked the wallet and
discovered that all the Bitcoin was gone.26 Ms. Baird contacted Mr.
Matlack about the missing Bitcoin. He told her that his computer had
been hacked, and that her Bitcoin had been stolen along with other
cryptocurrency assets he owned.27
In August of 2021, Ms. Baird sued Mr. Matlack in the 125th
Judicial District Court of Harris County, Texas, for breach of contract,
fraud, conversion, and other related causes of action.28 That case
proceeded through discovery and pre-trial proceedings and was set to be
heard in late January 2025.29
On January 22, 2025, Mr. Matlack filed a voluntary petition
under Chapter 7 of the Bankruptcy Code in this Court.30 Mr. Matlack
later converted his case to one under Chapter 13 of the Bankruptcy
Code.31

25 Id. 26 Id. at 46 ¶ 25− 47 ¶ 4.
27 Id. at 47 ¶¶ 18−25; ECF No. 89, at 197 ¶ 19−198 ¶ 5.
28 Plaintiff’s Original Petition and Request for Disclosures, Baird v. Matlack, Case No.
2021-51487 (125th Dist. Ct., Harris County, Tex. Aug. 18, 2021). While the state court
proceedings were mentioned in passing during trial, the parties did not present
evidence related to that case. However, the state court complaint was attached to Ms.
Baird’s proof of claim.
29 Setting Reminder, Baird v. Matlack, Case No. 2021-51487 (125th Dist. Ct., Harris
County, Tex. June 4, 2024).
30 Case No. 25-30348, ECF No. 1.
31 Case No. 25-30348, ECF No. 30.
On April 17, 2025, Ms. Baird initiated this adversary proceeding,
alleging that her claim against Mr. Matlack is excepted from discharge
under section 523 of the Bankruptcy Code.32
This case was tried on March 4th, 5th, and 24th.33 At trial, the
Court admitted documentary evidence, and testimony from multiple
witnesses, including one expert witness.34 At the conclusion of trial, the
Court requested supplemental briefing on one issue and took this case
under advisement after receipt of the briefs.35
JURISDICTION & VENUE 28 U.S.C. § 1334 (a) provides the District Court with jurisdiction
over this proceeding. 28 U.S.C. § 157 (b)(1) states that “[b]ankruptcy
judges may hear and determine all cases under title 11 and all core
proceedings arising under title 11, or arising in a case under title 11,
referred under subsection (a) of this section, and may enter appropriate
orders and judgments, subject to review under section 158 of this title.”
This proceeding has been referred to this Court under General Order
2012-6 (May 24, 2012). This is a core proceeding which the Court can
consider under 28 U.S.C. §§ 157 (b)(2)(A) and (B). The Court has
constitutional authority to enter final orders and judgments. Stern v.
Marshall, 564 U.S. 462, 486–87 (2011). Venue is proper under 28 U.S.C.
§§ 1408 and 1409.
LEGAL STANDARD
Section 523 of the Bankruptcy Code provides that a discharge
under section 1328(b) does not discharge an individual debtor from debts
for larceny. 11 U.S.C. § 523 (a)(4). Federal law controls the meaning of
“larceny” for the purposes of section 523(a)(4). NextGear Capital, Inc. v.

32 See ECF No. 1.
33 ECF Nos. 69−70, 80.
34 See id. 35 ECF No. 80.
Rifai (In re Rifai), 604 B.R. 277, 326 (Bankr. S.D. Tex. 2019). Federal
common law defines larceny as a “felonious taking of another’s personal
property with intent to convert it or deprive the owner of same.” Gomez
v. Saenz (In re Saenz), Case No. 13-70423, Adv. No. 13-07029, 2014 WL
3888315, at *5 (Bankr. S.D. Tex. Aug. 8, 2014). Judge Bohm36 defined
the elements of larceny as: (1) the fraudulent and wrongful taking away
of the property of another with (2) the intent to convert it to the taker’s
use and with intent to permanently deprive the owner of such property.
Nibbi v. Kilroy (In re Kilroy), 357 B.R. 411, 431 (Bankr. S.D. Tex. 2006).
“At a trial on a complaint objecting to a discharge, the plaintiff
has the burden of proof.” FED. R. BANKR. P. 4005. The plaintiff must
establish an exception to discharge by a preponderance of the evidence.
Grogan v. Garner, 498 U.S. 279, 287 (1991). Exceptions to discharge
must be narrowly construed against a creditor and liberally construed
in favor of a debtor so that a debtor may be afforded a fresh start. In re
Cowin, 864 F.3d 344, 349 (5th Cir. 2017). However, the relief provided
by the bankruptcy system is reserved for the “honest but unfortunate”
debtor. Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934).
DISCUSSION
Ms. Baird alleges that there are multiple grounds for this Court
to conclude that her claim against Mr. Matlack is excepted from
discharge under section 523 of the Bankruptcy Code.37 These grounds
include fraud, embezzlement, larceny, and willful and malicious
injury.38 Here, the Court determines that the most readily apparent
ground present in this case is larceny. The Court need not reach the
other grounds asserted.
The question presented is whether it is more likely than not that
Mr. Matlack wrongfully took Ms. Baird’s Bitcoin with the intent to

36 The Honorable Jeff Bohm retired from the Court in 2019.
37 ECF No. 23.
38 Id. convert it to his own use and permanently deprive her of it. The Court
finds that it is.
Both parties’ recollection of events, coupled with the expert
testimony regarding Trezor devices and hacking/phishing incidents,
provide substantial circumstantial evidence that demonstrates that Mr.
Matlack committed larceny.
The core facts are undisputed. The parties do not dispute that
Mr. Matlack transferred the 7.742 Bitcoin to a wallet owned by Ms.
Baird. Nor do they dispute that the wallet was accessible through a
Trezor device Mr. Matlack gave to Ms. Baird on July 30, 2020.39 Nor do
they dispute that on August 1, 2020, someone removed the 7.742 Bitcoin
from Ms. Baird’s wallet.40 The only question before the Court is whether
Mr. Matlack is the one who removed the 7.742 Bitcoin.
The Trezor device stored the seed words that gave access to the
wallet (and thus, the Bitcoin).41 The parties agree that connecting the
Trezor device to a computer was not the only way to have accessed the
wallet. Any person with the 24 seed phrase words could also access and
remove the Bitcoin.42 It is undisputed that no person other than Ms.
Baird and Mr. Matlack knew the 24 seed words on July 30, 2020. It is
also undisputed that Ms. Baird did not inform any person of the seed
words. Finally, it is undisputed that Ms. Baird’s seed phrase card was
stored in Ms. Baird’s locked safe.
To enhance the reader’s understanding, the seed words were 24
random words that were necessary to access the wallet. They were
stored both on the Trezor device and on a printed card. The words on

39 ECF No. 88, at 39 ¶¶ 3−23 (Testimony of Christie Baird); ECF No. 90, at 25 ¶¶ 2−10
(Testimony of Adam Matlack).
40 ECF No. 88, at 46 ¶ 25− 47 ¶ 4 (Testimony of Christie Baird); ECF No. 90, at ¶¶
11−23 (Testimony of Adam Matlack).
41 ECF No. 88, at 219 ¶¶ 9−24.
42 Id. at 219 ¶ 8 (“The owner of the seed phrase owns the wallet.”) (Testimony of
Jonathan Emmons).
the card were handwritten by Mr. Matlack when he set up the Trezor
device. He was alone when he created the wallet. Although he denies
that he retained a copy of the seed word card, Mr. Matlack had the
opportunity to take a photo or to hand write a duplicate of the seed
words. The following are the seed phrase words on the card Mr. Matlack
gave to Ms. Baird:
1. wasp 2. keen 3. news 4. aspect
5. fiscal 6. thought 7. sock 8. fragile
9. vicious 10. surge 11. asset 12. evil
13. spirit 14. latin 15. dry 16. crunch
17. throw 18. afraid 19. chair 20. solid
21. coral 22. capital 23. sister 24. gentle43

There is minimal direct evidence about what actually happened
to Ms. Baird’s 7.742 Bitcoin because of the difficulty of tracking Bitcoin
absent both the name of the thief and the thief’s wallet address.44 During
trial, the Court heard expert testimony from Jonathan Emmons.45
Considering Mr. Emmon’s background, experience, general demeanor,
and his response to extensive voir dire, the Court finds that Mr. Emmons
was a highly credible expert witness on cryptocurrency, cold wallet
technology (including Trezor devices), and hacking/phishing schemes.
Mr. Emmons testified that his examination of the blockchain
records shows that after the Bitcoin was removed from the wallet it was
split with half going to an unknown address and the other half going to
63 different addresses. The Bitcoin split amongst the 63 addresses was
exchanged for other cryptocurrencies.46 Mr. Emmons testified that he

43 ECF No. 58-6.
44 ECF No. 88, at 133 ¶¶ 3−12.
45 ECF Nos. 69−70.
46 ECF No. 89, at 12 ¶¶ 8−13; 28 ¶¶ 6−16.
would need more information (presumably through a subpoena) to
determine ownership.47
Even without this information, the Court concludes that Mr.
Matlack—rather than someone else—removed Ms. Baird’s 7.742 Bitcoin
from her wallet.
Mr. Emmons testified that a Trezor device is a type of cold wallet,
and that he personally has set up over 100 Trezor devices.48 When asked
to describe what a cold wallet was, Mr. Emmon’s answered that:
A cold wallet is the process of creating a key phrase inside
of . . . the process of making a wallet that gets assigned to
a hardware device that stores your cell, your . . . data that
says you’re the owner of anything sent to that cell. So a
cold wallet has no access to being on the network that it
represents unless I attach my hardware.49
Mr. Emmons walked the Court through how Trezor devices work
and how to properly set one.50 When a user sets up a Trezor device, the
device provides the user with a 24-word password called a recovery “seed
phrase.”51 Only a person with either the physical Trezor device or
knowledge of the 24-word seed phrase can access the funds within the
wallet.52 In Mr. Emmons’ words, “If you have the seed phrase, you can
recreate [the wallet] wherever you are and now you are the sole owner
and occupier of it on your new device or on the wallet you established
online.”53

47 ECF No. 88, at 204 ¶¶ 5−20.
48 Id. at 215 ¶¶ 4−21.
49 Id. at 214 ¶¶ 5−11.
50 Id. at 215−32; ECF No. 89, at 5−11.
51 ECF No. 88, at 230 ¶¶ 5−24.
52 Id. at 220 ¶¶ 8−12.
53 ECF No. 89, at 20 ¶¶ 16−19.
Mr. Matlack testified that he wrote down the Trezor device seed
phrase twice before giving a single seed phrase card to Ms. Baird.54 The
first time he handwrote the seed phrase on a seed phrase card when he
initially setup the device before he initiated a test transaction of .001
Bitcoin.55 The second time, he connected the Trezor device to his
computer to enable him to copy and paste the wallet address so he could
send the 7.742 Bitcoin.56 During the second instance, Mr. Matlack
testified that after typing the address “wallet.trezor.io” into his browser
he received an error message.57
According to Mr. Matlack, the error message prompted him to
recreate the wallet58 and he did and wrote down the seed phrase again.59
Mr. Matlack testified that the second time, however, he was prompted
to confirm each seed phrase word on the computer—a step that was not
part of the initial setup.60 Mr. Matlack did not think that being asked
to type in the seed phrase words was suspicious when he set up the
Trezor device for the second time.61 After Mr. Matlack completed setting
up the Trezor device the second time, he initiated the transfer of 7.742
Bitcoin to Ms. Baird’s wallet via an escrow swap.62
Mr. Matlack testified that after completing this transaction and
giving the device to Ms. Baird, the next time he used his computer his
screen was flooded with Metamask transaction notifications.63

54 Id. at 202 ¶¶ 4−11.
55 Id. at 179 ¶ 21−180 ¶ 19.
56 Id. at 183 ¶¶ 16−22.
57 Id. at 184−186.
58 Id. at 186 ¶¶ 23−25.
59 Id. at 187 ¶¶ 9−14.
60 Id. at 188 ¶¶ 12−20.
61 Id. at 190 ¶¶ 3−8.
62 Id. at 203 ¶¶ 16−22.
63 ECF No. 90, at 25 ¶¶ 14−25.
Metamask is a browser extension that shows various cryptocurrency
holdings in various exchanges.64 He testified that his computer was
“frozen basically” and he was unable to use it.65 Mr. Matlack alleged
that he believed that his computer was hacked and wiped all data from
his computer and reinstalled windows.66 He made no backup prior to
destroying the data.
As a result of this alleged hacking incident, Mr. Matlack claims
that he lost over $150,000 from accounts connected to his Metamask.67
After this alleged hack, Mr. Matlack took no action to try to determine
what happened to his stolen money68 and he presented no evidence
relating to this hack or the loss of any cryptocurrency assets.69
Since the time of the incident, Mr. Matlack testified that he has
come to believe that it was highly likely that he was hacked.70 He
believes that the hack occurred either before or during the second time
he set up the Trezor device.71 According to Mr. Matlack, this may have
occurred when he inadvertently entered the wrong Trezor website in his
browser.72 He alleges that he now believes he was directed to a lookalike
website.73 Alternatively, he alleges that his computer was already
compromised before he used the Trezor device the second time.74

64 Id. at 58 ¶¶ 17−20.
65 Id. ¶¶ 22−24.
66 Id. at 26 ¶¶ 2−10.
67 ECF No. 89, at 197 ¶ 24−198 ¶ 5.
68 Id. at 198 ¶¶ 6−16.
69 Id. at 201 ¶ ¶ 14−25.
70 ECF No. 90, at 45 ¶ 22−25.
71 Id. at 41 ¶¶ 5−9.
72 ECF No. 89, at 194 ¶¶ 10−12.
73 Id. 74 ECF No. 90, at 41 ¶ 5−9.
Rather than investigating, Mr. Matlack erased all memory on his
computer.75 His version of events cannot be verified because of his own
destruction of the history of the events.
Indeed, virtually all of Mr. Matlack’s version of events is
unconvincing. The removal of Ms. Baird’s Bitcoin from her wallet on
August 1, 2020, is inconsistent with a hack/phish. Mr. Emmons testified
that if a user’s seed phrase is exposed to hackers through a phishing
scheme, a hacker would instantly recreate the wallet and immediately
remove any cryptocurrency contained in the wallet.76 The true owner of
the wallet loses access to everything immediately.77
Mr. Emmon’s testified that this theft process is entirely
automated and instantaneous.78 As soon as a user exposes their seed
phrase to a phish, any funds held in the wallet are immediately
extracted.79 He further testified that phishing attackers do not leave
large balances sitting in a compromised wallet for extended periods of
time.80 This is because if a hacker does not instantly remove any
cryptocurrency contained in a compromised wallet that it places them
at risk of losing any funds which they have gained illegitimate access to
through the phishing scheme.81
Here, the Trezor device ledger indicates that Mr. Matlack first
transferred 0.001 Bitcoin to the wallet on July 28, 2020, at 5:24 p.m.82
Then, on July 30, 2020, at 10:50 a.m., he caused 7.742 Bitcoin to be

75 Id. at 26 ¶¶ 2−10.
76 ECF No. 89, at 24 ¶¶ 10−22.
77 Id. at 23 ¶¶ 1−8.
78 Id. at 24 ¶¶ 10−22.
79 Id. 80 Id. at 25 ¶¶ 17−20.
81 Id. at 26 ¶¶ 15−20.
82 ECF No. 58-5, at 2.
transferred to the wallet via a third-party escrow swap.83 Two days
later, on August 1, 2020, at 5:10 p.m., 7.742 Bitcoin was removed from
the wallet.84 There was a period of 54 hours and 20 minutes between
the transfer of the 7.742 Bitcoin and when the funds were removed. This
lengthy period of time is inconsistent with a hacking/phishing incident.
According to Mr. Emmons, his examination of the Trezor
blockchain indicated that on August 1, 2020 the wallet was recreated.85
Mr. Emmons testified that it was not possible to hack a Trezor device
unless it is physically connected to a computer, and if is not connected
to a computer, the only way a third party could remove cryptocurrency
from a Trezor wallet is to have the seed phrase, recreate the wallet, and
remove any cryptocurrency in the wallet.86
At the time the wallet was recreated, the Trezor device was stored
in Ms. Baird’s home safe.87 Thus, only a person with the seed phrase
could have removed any cryptocurrency from the wallet. Ms. Baird did
not have the technical expertise, nor any incentive, to undertake the
theft of her own Bitcoin.
Only two people had ever seen the seed phrase: Mr. Matlack and
Ms. Baird. Mr. Matlack saw the seed phrase twice and wrote it down
twice when he set up the Trezor device on two separate occasions. Mr.
Matlack testified that at some point he tore up and threw away the first
seed phrase card.88 However, the Court finds that after Mr. Matlack
gave Ms. Baird the Trezor device, he used the seed phrase to recreate
the wallet and transferred the Bitcoin for his own benefit.

83 Id. 84 Id. 85 ECF No. 89, at 22 ¶¶ 2−10.
86 Id. at 19−21.
87 ECF No. 88, at 45 ¶¶ 2−9.
88 ECF No. 90, at 20 ¶¶ 17−21.
The Court did not find Mr. Matlack to be a credible witness.
Throughout the trial, his testimony was riddled with inconsistencies
and “Clintonesque” responses. See Lain v. ZC Specialty Ins. Co. (In re
Senior Living Props., LLC, 309 B.R. 223, 250 (Bankr. N.D. Tex. 2004).
Part of Mr. Matlack’s defense was that this was simply a mistake89 made
by someone who does not consider themselves to be sophisticated in
cryptocurrencies.90 When asked about his level of competency in
cryptocurrency, the following exchange between Ms. Baird’s counsel,
Mr. Cobos, and Mr. Matlack took place:
Mr. Cobos: Is it a fair characterization to say that
you are sophisticated about matters of
cryptocurrency?
Mr. Matlack: I --- I don’t know what that -- it
depends on how you determine what
sophisticated it means.
Mr. Cobos: What does the word sophisticated
mean to you?
Mr. Matlack: I don’t know. Is that -- to be frank, it
means really smart or above average or
way -- way above.
Mr. Cobos: Let us try that. Were you really smart
when it came to matters of
cryptocurrency?
Mr. Matlack: No, I wouldn’t say that. No.91
However, the evidence introduced at trial demonstrated that Mr.
Matlack is extremely sophisticated in matters involving
cryptocurrencies. Mr. Matlack testified that he has owned various

89 Id. at 63 ¶¶ 22−24.
90 ECF No. 89, at 103−104.
91 ECF No. 89, at 103 ¶¶ 13−22.
cryptocurrencies since 201392 and has moved cryptocurrency across
accounts on multiple cryptocurrency exchanges.93 He was formerly the
Chief Executive Officer of the Paycoin Foundation, a company linked to
the cryptocurrency Paycoin.94 And at a time, he held himself out on his
public LinkedIn profile as a Blockchain and Distributed Ledger
Technology (“DLT”) Consultant.95
Mr. Matlack was also formerly the Chief Strategist of company
called Ionomy, which ran a cryptocurrency exchange and developed a
proprietary cryptocurrency called ION.96 And his 2017 joint tax return
filed with his ex-wife, Nicole Wilkins, showed that in 2017 he acquired
and sold over $8.6 million in cryptocurrency, totaling 17.2 million in
transactions in that year alone.97
Mr. Matlack’s testimony about the alleged hacking was also
inconsistent. At one point during trial, Mr. Matlack testified that due
to the hack he suffered that he lost all the contents on his MetaMask
account, approximately $150,000.98 However, he also testified that after
he allegedly suffered the hack that he had about 10 Bitcoins in his
Coinbase account.99 Despite having these significant cryptocurrency
assets, less than a year earlier, Mr. Matlack’s divorce decree did not list
any cryptocurrency as either separate or community property.100
When Mr. Matlack discovered that he had lost nearly $150,000 in
the alleged hacking incident, he did nothing (other than destroy the

92 ECF No. 89, at 99 ¶¶ 9−24.
93 Id. at 100 ¶¶ 16−101 ¶ 3.
94 Id. at 107 ¶¶ 16−17.
95 ECF No. 58-16.
96 ECF No. 89, at 109 ¶ 24−110 ¶ 24.
97 ECF No. 58-27, at 8.
98 ECF No. 89, at 198 ¶¶ 2−5.
99 Id. at 218, ¶¶ 18−24.
100 ECF No. 59-7.
evidence of any hack by wiping his computer).101 He did not report the
loss to any authorities or take any steps to try to recover the lost
funds.102 He did not try to take any steps to remedy Ms. Baird’s loss of
a significant portion of her retirement funds, despite his alleged
suspicions that he might have been at fault.103 Mr. Matlack claims that
he did not do anything because “[i]t was in the middle of COVID and
[he] was literally weeks away from [his] son being born.”104 Mr.
Matlack’s lackluster response is entirely inconsistent with someone who
allegedly lost $150,000 weeks before having a child. The Court does not
find his testimony to be credible.
It is worth noting that Mr. Matlack has publicly commented on
concealing cryptocurrency assets. In November 2020, in response to a
tweet by Coinbase CEO, Brian Armstrong, regarding regulations of
cryptocurrencies, Mr. Matlack tweeted: “[i]f even a shred of this is true
(in terms of the rumors) the feds can pound sand for all I care. Boat
accidents for crypto wallets incoming.”105 A “boat accident” is a joke that
originated in the firearms community that has been co-opted by the
cryptocurrency community.106 Mr. Cobos asserted that the phrase
“losing your wallet in a boating accident” is a joke in the cryptocurrency
community about making cryptocurrency disappear so the authorities
can’t get it.107
When asked about this tweet, Mr. Matlack stated that his
reference to “boat accidents” was due to his belief that people would not

101 ECF No. 89, at 198 ¶¶ 2−21.
102 Id.
103 Id. at 221 ¶ 4 (“I wasn’t trying to solve the problem.”).
104 Id. ¶ 19−20.
105 ECF No. 58-19.
106 ECF No. 89, at 135 ¶¶ 1−6.
107 Id. at 134 ¶ 23−135 ¶ 3.
claim their assets.108 He also noted that due to the nature of
cryptocurrency it is difficult to prove ownership of cryptocurrency
assets.109 Additionally, Ms. Wilkin’s testified that Mr. Matlack told her
one of the reasons he got into crypto was because it was not as easily
monitored as cash and digital transactions of bank accounts.110
Mr. Matlack argued that much of the evidence presented at trial
was introduced to assassinate his character, including the testimony of
his ex-wife, Nicole Wilkins. The character testimony focused on other
bad acts by Mr. Matlack.111 The Court’s decision, however, does not rely
on any of that character evidence to reach its decision. Separate from
the character evidence was the evidence of pattern discussed below.
That pattern bolsters the Court’s conclusion.
At trial, Ms. Baird offered the testimony of Nicole Wilkins.112 Ms.
Wilkins testified that during her marriage to Mr. Matlack, he set up a
Trezor wallet for her, and told her that he had funded it with $1 million
of Bitcoin.113 She testified that about 1 week after their divorce, Mr.
Matlack gave her a seed phrase card for a Trezor wallet.114 Ms. Wilkins
testified that she later checked the wallet to find that there was no
Bitcoin in it.115 When Ms. Wilkins confronted Mr. Matlack about the
missing Bitcoin, he said that his computer had been hacked and
somebody had stolen the Bitcoin from him.116

108 ECF No. 89, at 137 ¶ ¶ 2−13.
109 Id.
110 ECF No. 88, at 180 ¶¶ 5−18.
111 ECF No. 90, at 60 ¶¶ 8−13.
112 See ECF No. 69.
113 ECF No. 88, at 121−22.
114 Id. at 122 ¶ 12.
115 Id. at 122 ¶¶ 23−25.
116 Id. at 126 ¶ 21−127 ¶ 1.
Ms. Wilkins’ testimony, if true, is compelling pattern evidence as
the content of her testimony is almost exactly what happened in this
case. See FED. R. EVID. 404(b)(2). In her declaration, which was
admitted only for impeachment purposes, she stated that she had
possession of both a “cold wallet” and a “seed phrase card.”117 Her
declaration continues that she “connected” the cold wallet to her
computer to check the balance and found that the wallet was empty.118
However, at trial she testified that she was only given a seed
phrase card—not a Trezor device.119 Ms. Wilkins testified that she
viewed the zero balance without connecting the Trezor device on the
“computer screen where you have to put in the code.”120 Ms. Wilkins
was apparently confused and conflated a cold wallet and a seed phrase
card.121 At trial the following exchange took place between the Court
and Ms. Wilkins regarding viewing the zero balance on the Trezor
wallet:
The Court: Okay. So tell me what you did.
Ms. Wilkins: I went to the Trezor thing on the
computer and then you don’t have the
device, you have to use the seed code to,
like, reinstate or regenerate or
whatever you want to call bringing up
the wallet without the little plug-in
part. And then it asks you for your seed
phrase, which is the list of words that
you have to type in in a specific order in
order to make -- in order to be able to
access the wallet.

117 ECF No. 58-26 ¶ 10.
118 Id. ¶ 11.
119 ECF No. 88, at 121 ¶¶ 23−25.
120 Id. at 159 ¶¶ 17−25.
121 Id. at 163 ¶¶ 7−10.
The Court: Okay. So what did you do?
Ms. Wilkins: I typed in the words in the order that
they were numbered on the paper, and
then, like, you click enter or whatever
on the screen, and then it comes up
with, like, a little black rectangle thing
that looks not like a real wallet, but it
says, like, a dollar amount on the
screen and tells you, like, in bitcoin
how much is on there, and then in U.S.
dollars how much is on there,
generally, I think.
The Court: Does it verify that what you typed in
was a valid set of words?
Ms. Wilkins: The only way you can, like, it’ll bring
up the wallet is if it is a valid -- like, if
you mistype it, I think it just gives you
an error message or something. I’m not
sure exactly what happens if you do it
wrong.
The Court: Okay. And so what did it show you
then?
Ms. Wilkins: It just had, like, a zero balance. Like, a
little green zero on it, the screen.122
Mr. Emmons testified that a user could recreate a wallet by
typing in the seed phrase words to an online wallet that uses the same
technology as Trezor wallets, called BIP39.123 He testified that BIP39
is the security metric that 80% of wallets use.124 However, Mr. Emmons
testified that “there’s not an opportunity with Trezor’s system to do it

122 Id. at 183 ¶ 16−184 ¶ 15.
123 ECF No. 88, at 227 ¶¶ 2−23.
124 Id. at 219 ¶¶ 23−24.
without a device. But there are other companies that are compatible
with Trezor’s technology.”125
The timing of the incident which Ms. Wilkins testified about was
slightly confusing. Ms. Wilkins’ declaration stated that Mr. Matlack
gave her the seed phrase card before the divorce.126 However, she
testified that Mr. Matlack put $1 million on the cold wallet “[a]fter the
paper divorce and before he moved out.”127
Mr. Matlack’s version of the same events makes no sense. When
asked about Ms. Wilkins’ testimony, the following exchange took place:
Mr. Cobos: You gave her a seed phrase card to a
cold wallet that had a million dollars in
bitcoin, didn’t you?
Mr. Matlack: So I -- no, that’s not true.
. . .
Mr. Cobos: Okay. Well, tell me. What happened?
Mr. Matlack: At some point in I believe it was 2019.
I’m pretty sure it had to be. In one of
our conversations, I don’t really know,
it talked about -- like, she mentioned
the idea that what happens if
something happens to me. And so, you
know, can you get access to stuff or all
this stuff? And so I took that and was
like, I had the intention of making a --
essentially, I wouldn’t call it a cold
wallet, but a wallet that she had the
private keys to. So that if something
happened to me, she would be able to

125 Id. at 227 ¶¶ 6−14.
126 ECF No. 58-26 ¶ 10.
127 ECF No. 88, at 167 ¶ 17.
access it. And the intent was for me to
put money on it.
Mr. Cobos: Did you put money on it?
Mr. Matlack: No, sir.
Mr. Cobos: You gave her a cold wallet with the
intent that she would be able to access
it if something happened to you.
Mr. Matlack: Correct. That was the reason why I
gave her the card. Well, it was just a
piece of paper. It wasn't a card.128
The Court did not find Mr. Matlack’s testimony to be credible
because it makes no sense for him to give her the seed phrase or “keys”
to a wallet that was not funded.
The Court observed Ms. Wilkins testimony and found her to be
credible. While there were some inconsistencies in her testimony, she
was testifying about events that occurred over six years ago, and she is
not sophisticated in matters involving cryptocurrency. While the Court
acknowledges that Ms. Wilkins is both Mr. Matlack’s ex-wife and friends
with Ms. Baird, these considerations do not render her testimony
incredible. They do affect the weight the Court should afford her
testimony.
Mr. Matlack is a sophisticated user of cryptocurrency and the only
person who had access to Ms. Baird’s seed phrase other than her. Mr.
Matlack’s background and experience in cryptocurrency make him
capable of recreating a cryptocurrency wallet and dividing its contents
so that it cannot easily be traced. And he has publicly joked about
concealing cryptocurrency assets from the government in the past. His
attempts to divert blame for this incident to a hacking/phishing scheme
are unconvincing, and the sequence of events in the record is entirely
inconsistent with how hacking/phishing schemes work.

128 ECF No. 89, at 129 ¶ 14−130 ¶ 10.
Mr. Matlack was not a credible witness. He offered no
corroborating evidence in support of his defense, as he wiped all of the
data from his allegedly hacked computer. He was unable to provide any
tangible evidence that he suffered any losses as a result of the alleged
hack. Additionally, although the Court’s conclusion does not rely on Ms.
Wilkins’ testimony that Mr. Matlack had previously engaged in nearly
identical conduct, her testimony bolsters the conclusion that Mr.
Matlack misappropriated Ms. Baird’s Bitcoin.
The Fifth Circuit has held that a creditor may rely on
circumstantial evidence to prove a debtor’s state of mind for purposes of
nondischargeability. In re Mercer, 246 F.3d 391, 409 (5th Cir. 2001).
And in the context of nondischargeability on account of embezzlement
under 11 U.S.C. § 523 (a)(4), bankruptcy courts have held that both a
wrongful appropriation and intent may be proved by circumstantial
evidence. Bluegrass Stockyards of Campbellsville, LLC v. Smith (In re
Smith), 429 B.R. 864, 871 (Bankr. W.D. Ky. 2010). Ms. Baird has shown
by a preponderance of the evidence that Mr. Matlack fraudulently and
wrongfully took her Bitcoin with the intent to convert it to his own use
and with the intent to permanently deprive her of it.
CONCLUSION
Ms. Baird’s claim against Mr. Matlack is excepted from discharge
under 11 U.S.C. § 523 (a)(4) as a debt arising from Mr. Matlack’s
commission of larceny. The Court will hold an evidentiary hearing on
the amount of damages on May 26, 2026, at 9:00 a.m.

SIGNED 04/15/2026
——m
L/L
Marvin Isg’ur
United States Bankruptcy Judge

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