UK court rules Chinese law governs $5 billion Bitcoin seizure

What happened

A London High Court ruled on October 12 that Chinese law governs ownership claims over 61,000 Bitcoin seized from fraudster Zhimin Qian. High Court Justice Mark Turner rejected arguments from Chinese victims that English property law should apply to their claims over the cryptocurrency, currently worth approximately $5 billion.

The seized Bitcoin originated from investment schemes that Qian operated between 2014 and 2017 through Tianjin Lantian Gerui Electronic Technology and related businesses. These schemes collected approximately 40.23 billion yuan through at least 128,409 investment contracts. Qian converted part of the proceeds into Bitcoin, including purchases of more than 100,000 BTC through cryptocurrency exchange Huobi and over-the-counter transactions in China.

Qian fled China in 2017 and relocated to Britain, where authorities seized devices, private keys and other assets linked to the Bitcoin. The cryptocurrency became the subject of civil recovery proceedings initiated by Britain's Director of Public Prosecutions under the Proceeds of Crime Act 2002.

The investors sought to establish ownership of the coins by arguing that English legal principles could let them trace their stolen investments into the cryptocurrency. They contended that fraudulent investment contracts could be rescinded, creating trust-based ownership interests that followed the money into Bitcoin. Turner rejected this approach, finding that the legal relationships established during the fraud occurred in China.

Why it matters

The ruling could significantly affect victims' recovery prospects. Under UK law, claimants must establish a proprietary interest in assets, rather than merely demonstrate that criminals owe them compensation. By applying Chinese law to determine ownership claims, the court limited victims' potential recovery to the original value of their losses rather than the current cryptocurrency value. This approach could leave substantial price appreciation with the UK government.

The judgment emphasizes that proving fraud does not automatically grant ownership rights to the Bitcoin acquired with stolen proceeds. Further proceedings will determine whether Chinese law recognizes the ownership interests that investors assert in the recovered cryptocurrency. The decision is preliminary, and victims are appealing the ruling.

What is still unclear

• Approximately 34.1 billion yuan flowed back to investors during the scheme's operation, though the exact number of individual victims remains unclear despite records showing at least 128,409 investment contracts.
• The court noted that the number of investment contracts should not be mistaken for the number of individual victims, leaving the precise victim count undetermined.

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