China Steps Up Bid to Confiscate $5 Billion Bitcoin From UK-Based Fraudster

Chinese authorities are moving to seize roughly 62,000 bitcoins — worth some $5 billion at current rates — tied to a massive fraud case.

Shanghai’s The Paper reported last week that prosecutors claim Qian Zhimin, who is said to be the controller of Tianjin Lantian Gerui Electronic Technology, brought in partners to market bogus wealth management products across China between 2014 and 2017, without approval from financial regulators, promising assured returns.

About RMB 40.3 billion ($2.8 billion) was raised through the scheme. Qian is accused of using investor funds to repay earlier participants in a Ponzi-like manner, while diverting money into bitcoin, real estate, vehicles, and jewelry. Only a small portion of the proceeds was directed to lawful business activities.

In July 2017, as the fraud was collapsing, Qian left for the United Kingdom taking computers that stored the bitcoin wallets. Subsequently, UK authorities confiscated the digital assets and other possessions, comprising about 61,900 BTC as well as cash, jewelry, and additional cryptocurrencies.

A major development occurred when the UK High Court recently decided that Chinese law, rather than UK law, governs ownership disputes concerning the confiscated bitcoin.

The value of the coins has soared dramatically since 2017, and the ruling on applicable law will decide if victims are entitled to a portion of those gains. According to the UK’s Crown Prosecution Service, victims might recoup losses via China’s compensation system; however, lawyers from Fieldfisher, representing certain victims, are weighing an appeal. Additional court sessions will establish whether victims can demonstrate their claim to the assets.

In parallel, the Second Intermediate People’s Court of Tianjin stated on September 28 that it has accepted the prosecutor’s request to seize Qian’s illegal assets.

Victims may sign up to take part in asset recovery processes via a WeChat platform, which includes a six-month notification period prior to the start of the formal trial.

China maintains some of the most stringent regulations globally for cryptocurrencies. The country outlawed digital asset trading and bitcoin mining in 2021.