UK Court Applies Chinese Law to 61,000 BTC Fraud Seizure

A London High Court judge ruled Monday that Chinese law governs ownership claims to 61,000 Bitcoin seized from convicted fraudster Zhimin Qian, a decision that sharply narrows the path for thousands of victims seeking to recover their losses and bolsters the UK government’s position to potentially retain the cryptocurrency.

The ruling by Justice Mark Turner resolves a critical threshold question in one of the largest crypto seizures in British history. At current market prices near $83,200 per coin, the 61,000 BTC haul is valued at approximately $5 billion. Because the fraud, the investment contracts, and the initial conversion of fiat currency into Bitcoin all occurred within China, Turner determined that English property law cannot apply to the victims’ claims.

Under the UK’s Proceeds of Crime Act 2002 (POCA), victims attempting to reclaim seized assets must demonstrate a direct proprietary interest in the specific property held by authorities. POCA does not function as a broad compensation fund for crime victims. Had English law applied, claimants might have leveraged domestic tracing principles to argue that their original funds were directly converted into the specific Bitcoin now held by the Crown Prosecution Service (CPS). Turner explicitly rejected this route, noting that because the Bitcoin was purchased in China, any property rights the victims lost under Chinese law at the moment of purchase cannot be resurrected simply by tracing the digital assets once they arrived in England.

Qian pleaded guilty last year to fraud and money laundering charges connected to a massive Ponzi scheme operating between 2014 and 2017. The operation ensnared investors through at least 128,409 contracts, collecting roughly RMB 40.2 billion — about £4.1 billion. While approximately RMB 34.1 billion was returned to earlier participants to sustain the scheme, Qian ultimately received an 11-year prison sentence.

The choice-of-law determination carries significant financial implications beyond the courtroom. Unnamed Treasury officials reportedly discussed internally last year whether the seized Bitcoin, which was valued closer to $7 billion during Qian’s trial before recent market fluctuations, could be liquidated or held to offset shortfalls in UK public finances. Britain has historically auctioned seized criminal assets, but retaining a multi-billion-dollar volatile asset on the sovereign balance sheet represents uncharted territory for HM Treasury.

For the victims, the immediate challenge shifts to proving what Chinese civil and property law actually dictates regarding stolen funds converted into cryptocurrency. China maintains a strict prohibition on cryptocurrency trading and mining, established through sweeping regulatory bans in 2021. How Chinese courts classify Bitcoin — whether as virtual property, data, or an illegal instrument — remains legally complex and will heavily influence whether victims can establish the proprietary interest required by the UK court.

Turner’s order does not finalize who keeps the Bitcoin. The substantive content of Chinese law and how it applies to individual claims remain undecided. A subsequent hearing will address these evidentiary questions.

Fieldfisher, the law firm representing the claimants, confirmed plans to appeal the choice-of-law ruling. The CPS stated that the upcoming hearings will determine if any victims can successfully establish a recognized interest in the Bitcoin under the applicable legal framework.