The UK’s High Court has ruled that Chinese law governs victims’ claims to 61,000 BTC seized in a British fraud case, a stash worth about $5 billion.
The ruling, by Justice Mark Turner, sided with the Director of Public Prosecutions. It found that the fraud, the payments and the contracts behind it all took place in China. “The relevant damage occurred in China. The Applicants parted with their money in China,” he wrote.
The case
The Bitcoin is linked to Zhimin Qian, who was jailed for more than 11 years last year after pleading guilty to fraud and money laundering. Her Ponzi scheme defrauded Chinese investors between 2014 and 2017.
Investors entered into at least 128,409 contracts and paid in about RMB 40.2 billion, roughly £4.1 billion. About RMB 34.1 billion was paid back to some of them. Thousands of victims have applied under the Proceeds of Crime Act to have parts of the Bitcoin declared theirs.
Why the ruling matters
The decision makes those claims harder. Turner said the victims must show a property interest in the coins themselves, because the law offers no wider compensation scheme for crime victims. And because the Bitcoin was bought in China, tracing it in England cannot revive property rights the victims lost under Chinese law.
The ruling does not decide who keeps the Bitcoin. A further hearing will look at how Chinese law applies and whether any victims can establish an interest. Fieldfisher, the law firm representing the claimants, is pursuing an appeal, according to the Financial Times. Prosecutors have previously said victims could be compensated through a redress scheme run from China.
The Treasury’s interest
The haul is large enough to matter to the public finances. The Financial Times reported last year that Treasury officials privately discussed whether the seized Bitcoin could help fill a gap in the UK budget. No formal plan has been announced.
At the time of Qian’s trial, the coins were worth about $7 billion.
