UK Court Rules Chinese Law Governs Claim to Seized $5 Billion Bitcoin Fortune
A London judge determined that Chinese law must decide ownership claims over more than 61,000 seized Bitcoin linked to an investment fraud.
UK Court Rules Chinese Law Governs Claim to Seized $5 Billion Bitcoin Fortune
A London judge determined that Chinese law must decide ownership claims over more than 61,000 seized Bitcoin linked to an investment fraud.
UK Court Rules on Seized Bitcoin Ownership
A London judge has rejected a bid by Chinese fraud victims to use English law to claim a seized Bitcoin fortune currently valued at approximately $5 billion. In an October 12 ruling, High Court Justice Mark Turner determined that Chinese law must govern ownership claims over the more than 61,000 seized Bitcoin, according to CryptoSlate.
The decision leaves thousands of victims facing a difficult recovery battle. According to the court, proving they lost money to investment fraud does not automatically establish ownership of the cryptocurrency acquired with its proceeds.
The case stems from investment schemes operated by Zhimin Qian through Tianjin Lantian Gerui Electronic Technology and associated businesses between 2014 and 2017. Court records showed the schemes collected approximately 40.23 billion yuan through at least 128,409 investment contracts, though the court noted this figure should not be mistaken for the exact number of individual victims.
Tracing the Proceeds of Fraud
During the operation of the schemes, approximately 34.1 billion yuan flowed back to investors as repayments, while other participants received nothing. Qian converted part of the remaining proceeds into cryptocurrency, purchasing over 100,000 Bitcoin through an account on the Huobi exchange and via over-the-counter transactions in China.
After fleeing China in 2017 and relocating to Britain, authorities seized devices, private keys, and other assets linked to the seized Bitcoin. The cryptocurrency became the subject of civil recovery proceedings initiated by Britain's Director of Public Prosecution under the Proceeds of Crime Act 2002.
Chinese investors argued that English legal principles should allow them to trace their stolen investments into the cryptocurrency acquired by Qian, maintaining that fraudulent investment contracts could be rescinded to create trust-based ownership interests. However, British prosecutors opposed this approach.
Legal Framework and Next Steps
Justice Turner agreed with prosecutors, finding that the investors, perpetrators, payments, and cryptocurrency purchases were overwhelmingly connected to China. The judge rejected arguments that Bitcoin's eventual physical presence in Britain should dictate which country's property laws applied, choosing instead to focus on the legal relationships established during the initial investments and subsequent conversions.
Under Section 281 of Britain's Proceeds of Crime Act, claimants must establish a proprietary interest in targeted assets rather than merely demonstrating that criminals owe them compensation. Turner emphasized that the provision does not create a broader compensation scheme for victims of criminal conduct.
The next legal proceedings will determine whether Chinese law recognizes the ownership interests that investors are asserting in the recovered cryptocurrency.
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